Chile Set for Final Rate Cut as Inflation Falls Below Target

Chile’s marathon rate-cutting cycle is about to end where monetary policymakers want it — right at neutral. This is part of The Rio Times’ daily coverage of Chile affairs and Latin American financial news.

The central bank’s Financial Operators Survey, published Wednesday, confirmed what markets expected: a 25-basis-point cut to 4.25% at the March 24 meeting.

Operators expect the rate to stay there for at least 35 months, marking 4.25% as the terminal rate — a 700-point descent from the 11.25% peak hit in late 2022.

Inflation Clears Path For Rate Cut

The inflation picture supports the move. January’s CPI came in at 2.8% year-over-year — below the 3% target for the first time in this easing phase. Operators expect a 0.2% monthly rise in February, leaving the 12-month forward outlook at 2.9%, comfortably inside the 2-4% tolerance band.

The macro backdrop has turned favorable. GDP growth forecasts ticked up to 2.6%, copper holds above $5 per pound, and the peso is expected around 855-859 per dollar over the coming month.

The bank‘s January meeting held the rate but signaled near-term inflation would undershoot even December’s projections — a clear hint that March was the date.

For the incoming government, which takes office in mid-March pledging to boost growth, a rate at neutral removes one lever but also means monetary policy is no longer a headwind.

The question shifts from how low rates go to how long they stay — and whether global trade tensions will let Chile’s central bank enjoy the soft landing it has engineered.

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