Chile to Cut Policy Rate, Peru to Hold

While economists predict Chile is likely to cut its monetary policy rate by as much as 75bp tomorrow, Peru is expected to keep rates unchanged. JPMorgan forecasts that in Peru, rates will stay at 6.50% as inflation remains high at 6.65%, down only slightly from its November peak of 6.75%. BBVA says the same, adding that “credit to the private sector continues expanding by more than 30% year over year.” Regarding Chile, where the rate is 8.25%, local firm Inversiones Security forecasts the central bank will cut by 25bp to 50bp, as CPI dropped 1.2%, while the consensus was for a 0.6% fall. Barclays and JPMorgan expect Chile’s central bank to be more aggressive and loosen by 75bp.