Chile: As expected, the central bank cut the policy rate by 25bp and moderated its dovish bias

Summary

In accordance with consensus expectations, the central bank cut the policy rate by 25bp to 3.25% and moderated the dovish bias. In our view, this option prevailed in the board’s arguments due to weak activity figures and transitory elements behind CPI inflation prints of above 4% YoY. In this context, we still consider that future monetary policy decisions will remain data-dependent on short-term inflation figures; nonetheless we consider that further stimulus is likely to be necessary for the rest of the year (BBVAe: 2.75% at 2014 eop).

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