Chile Flash: Central Bank continues in a wait and see stance but reinforced the dovish bias

As expected by both ourselves and consensus, the central bank kept the monetary policy rate at 4% in June. In our view, this option prevailed in the board’s arguments due to annual inflation figures above the tolerance range of 2% to 4%, although it was nonetheless evaluated as a transitory phenomenon in the most likely scenario. In this context, monetary policy decisions will remain data-dependent in the coming months, even though we consider that further monetary stimulus are necessary for the rest of the year (BBVA: 3.25% at 2014 eop) to warrant medium-term inflation figures at 3% YoY. The latter, was reinforced by the maintenance of the dovish bias in yesterday’s communiqué. In this regard, further cuts in policy rate will materialise when inflation starts to ease.

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