Chile’s central bank paused its cycle of interest rate cuts and left all options on the table for future borrowing cost adjustments, citing heightened uncertainty as well as domestic and global inflation risks, Bloomberg News reported. Policymakers led by Rosanna Costa voted unanimously to keep borrowing costs at 5% late on Tuesday, as expected by all analysts in a Bloomberg survey. In an accompanying statement, board members wrote that a weaker peso, higher labor costs and an increase in electricity tariffs are driving inflation dynamics.
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Chile
Chile’s consumer prices fell last month for the first time since June, giving the central bank only limited relief as it monitors inflationary threats including higher electricity tariffs and a weak currency, Bloomberg News reported. Prices fell 0.2% in December, below all forecasts in a Bloomberg survey of analysts that had a median estimate of no change. Annual inflation accelerated to 4.5%, the national statistics institute reported on Wednesday. Central bankers led by Rosanna Costa have cut borrowing costs by 6.25 percentage points since mid-2023 to the current level of 5%.
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Chile’s WOM won court approval to exit bankruptcy proceedings after it agreed to a takeover and restructuring bid from a group of creditors, eight months after filing for chapter 11, Bloomberg News reported. A U.S. bankruptcy judge rejected an objection to the takeover bid by a rival group of creditors, according to a statement from the company. The offer represented the only viable option for WOM to exit chapter 11 proceedings, the tribunal said.
Chile’s central bank cut its key interest rate by a quarter point for the third meeting and delivered a stern warning on short-term inflation challenges, raising the odds of a coming pause to its easing cycle, Bloomberg News reported. Policymakers led by Rosanna Costa voted unanimously to lower borrowing costs to 5% late Tuesday, as expected by all analysts in a Bloomberg survey except three who forecast no change. Rates have tumbled from 11.25% in mid-2023. In an accompanying statement, policymakers wrote that the inflation outlook has become more daunting.
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Chile’s billionaire Luksic family is seeking €217 million ($226 million) in compensation from Banco Santander SA, PriceWaterhouseCoopers LLP and others in connection to the collapse of a Spanish lender seven years ago, Bloomberg News reported. Aeris Invest, a Luxembourg-based financial holding company owned by South America’s second wealthiest family, is demanding the payment to cover losses incurred as shareholders of Banco Popular, after the lender went bankrupt and was taken over by Santander in 2017, according to legal documents seen by Bloomberg.
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Inflation smashed through the top of the central bank’s tolerance range in Brazil and accelerated much more than expected in Chile as surging energy costs give policymakers another reason to worry, Bloomberg News reported. Official data released Friday showed Brazil’s consumer prices rose 4.76% in October from the year prior, above the 4.5% tolerance ceiling of the central bank’s goal. Chile’s cost of living posted the biggest monthly rise since March of last year as annual inflation sped up to 4.7%.
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Latam Airlines Group SA is tapping global debt markets for the first time since the carrier emerged from its chapter 11 bankruptcy, Bloomberg News reported. The Santiago-based airline is selling $1.2 billion in dollar notes maturing in 2030. Initial price talks are taking place at a yield in the low-to-mid 8% range. Latam, the largest carrier in South America, exited the chapter 11 process in late 2022 with 35% less debt, placing a renewed focus on customer service. It recently returned to the New York Stock Exchange, with an offering of American depositary shares.
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Chile’s economic activity unexpectedly contracted in August on a decline in services, corroborating the central bank’s message that more interest rate cuts are on the way, Bloomberg News reported. The Imacec index, a proxy for gross domestic product, fell 0.2% on the month, matching the worst estimate in a Bloomberg survey of analysts that had a median forecast of 0.3% growth. From the year earlier, activity gained 2.3%, the central bank reported on Tuesday.
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Chile’s economy contracted on a quarterly basis for the first time in a year, marking a significant downturn that bolsters the case for a resumption of interest rate cuts, Bloomberg News reported. Gross domestic product fell 0.6% in the second quarter from the prior three months, in line with the median forecast of analysts in a Bloomberg survey. From a year ago, it expanded 1.6%, the central bank reported on Monday. Chilean policymakers paused their easing cycle last month as they weighed near-term inflationary pressures against a downturn in the economic recovery.
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Troubled Chilean salmon-farming company Nova Austral appears to have been given the go-ahead to continue with its reorganization, Fish Farmer Magazine reported. Following a new appeal by the company and other organizations, a court in the south of the country has permanently reversed a bankruptcy order. A temporary appeal was allowed in May. This means a long running saga, and a series of delays which saw the business come close to being wound up or sold, should at last be over.