Rapid decline in inflation in Chile exceeds expectations

Chile’s inflation rate has fallen more quickly than anticipated and could end the year even lower, according to Luis Felipe Céspedes, an advisor at the Central Bank of Chile.

This projection takes into account the recent depreciation of the Chilean peso, which could slightly influence the forecast.

Céspedes noted the country’s economy is adjusting as predicted, although some supply-side factors differ from expectations.

In the short term, Céspedes anticipates the monetary policy interest rate cut to be larger than initially planned in June.

Last month, the Central Bank agreed to reduce the monetary policy interest rate by 100 basis points to 10.25%, larger than the experts’ prediction of a 75 point reduction.

This tool helps curb inflation by decreasing monetary stimulus.

Céspedes also mentioned the rising dollar, which has exceeded 840 Chilean pesos earlier this month, the highest level since January.

As of last June, Chile’s inflation rate saw a greater-than-expected slowdown of 0.2% compared to May, resulting in a 7.6% annual change, as per the National Statistics Institute data.