Chile

Chile's economic activity index dropped for the fifth month in a row in June, central bank data showed on Tuesday, underscoring some weakness in the world's largest copper producer just as the monetary authority starts cutting interest rates, Reuters reported.

Chile's economic activity index fell for the fourth consecutive month in May, the central bank said on Monday, underscoring the economic headwinds faced by the world's largest producer of copper amid high interest rates, Reuters reported. The IMACEC index, a close proxy of gross domestic product (GDP), dropped 2% in May from the same month last year, while slipping 0.5% when compared with the previous month. "The annual change in the IMACEC index was explained by a drop in mining and, to a lesser extent, in trade," the central bank said in a statement.

Chile's central bank on Tuesday lowered the high-end of its forecast for economic growth in 2023 amid still tight financial conditions, but increased the outlook for 2024 as it hints at potential interest rate cuts in the short-term, Reuters reported. The revisions came a day after the monetary authority decided to keep its benchmark interest rate unchanged at 11.25%, but said it could begin cutting it soon if recent positive trends continue.

Chile’s annual inflation slowed more than forecast in May on falling transportation costs, stoking bets that the central bank will lower its interest rate from an over two-decade high as soon as next month, Bloomberg News reported. Consumer prices increased 8.7% from a year prior, less than the 8.9% median forecast of analysts in a Bloomberg survey. Monthly inflation stood at 0.1%, the national statistics institute reported on Thursday. A closely-watched price gauge that excludes volatile items rose 9.9% in 12 months and 0.5% from April. Chile’s central bank targets inflation of 3%.

Chile’s economic activity remained flat in April, stoking bets that the central bank will start to lower the benchmark interest rate from an over two-decade high as early as July. Swap rates tumbled. The Imacec index, a proxy for gross domestic product, was unchanged on the month, below the 0.1% median estimate of analysts in a Bloomberg survey. From a year prior, it decreased 1.1%, the central bank reported on Thursday. Chile’s central bank has stuck to its hawkish stance, emphasizing that headline and core inflation remain well above its 3% target even as the economy stagnates.

Chile’s central bank said there’s no evidence that the domestic inflation slowdown had been consolidated, even as headline consumer price and consumption readings head in the right direction, Bloomberg News reported. The only plausible monetary policy option was to keep rates unchanged at an over two-decade high of 11.25%, central bankers wrote in the minutes to their May 12 decision. The risks associated with scenarios of higher inflationary pressures were “particularly complex and costly,” they wrote.

Chile’s economy picked up at the start of the year, growing at the fastest pace since the end of 2021 amid an expansion in service industries, the central bank said, Bloomberg News reported. Gross domestic product grew 0.8% in the first quarter from the prior three months and fell 0.6% from a year before. Economists surveyed by Bloomberg expected 1% expansion quarter-on-quarter and a 0.9% contraction year-on-year. Fourth-quarter growth was revised to 0.2% quarter-on-quarter from 0.1%.

Chile signed a 15-year credit line for $1 billion with the Inter-American Development Bank (IDB) to promote the development of small and medium-sized companies, the Ministry of Finance reported on Sunday, Reuters reported. The Washington, D.C.-based agency had approved the plan in early December to "increase productivity and promote sustainable development." Chilean Finance Minister Mario Marcel signed the agreement for the establishment of a conditional credit line for investment projects (CCLIP) during an annual IDB meeting in Panama.

Latin America’s largest airline is planning a return to US capital markets after cutting nearly $4 billion of debt during a years-long restructuring, Bloomberg News reported. Latam Airlines Group SA will seek to re-list its American depositary receipts on the New York Stock Exchange this year after they were suspended during the bankruptcy, Chief Financial Officer Ramiro Alfonsín said in a video interview. It also expects to return to international bond markets next year, he said.

Chile's central bank maintained its benchmark interest rate at 11.25% on Thursday, as expected, in a unanimous decision by its governing board, with the bank saying inflation remains high and related risks persist, Reuters reported. The central bank embarked on an aggressive monetary policy tightening cycle in July 2021 to reign in spiraling inflation and has increased the rate by a 1,075 basis points since then to its current level. The rate has remained at 11.25% since October.