Chile

When global inflation surged in 2021, many of Latin America’s central bankers were the first to raise interest rates, moving months before the Federal Reserve began tightening. Recalling how hyperinflation topped 3,000% in some countries in the 1980s, central-bank economists from Brasília to Lima to Mexico City knew all too well the damage that soaring prices could cause. Now, Latin America is again at the forefront of the cycle, cutting rates as inflation comes back down, the Wall Street Journal reported.

Chile's central bank could consider interest rate cuts of 75 or 100 basis points at its next meetings, minutes from the board's July meeting showed on Monday, while also cautioning that inflation remained high, Reuters reported. The bank's board voted unanimously in July to cut the benchmark interest rate by 100 basis points to 10.25%, although some board members expressed concern about the move, according to the minutes.

Chile's benchmark interest rate will likely come down to between 7.75% and 8% by the end of the year, as expected by analysts, the country's central bank chief said on Thursday, Reuters reported. Chile's central bank was one of the first in Latin America to cut interest rates during the current monetary policy cycle, slashing the rate from 11.25% to 10.25% at the end of July. However, the 100-basis-point cut is not indicative of future rate moves in Chile, central bank chief Rosanna Costa cautioned, speaking at an event.

Chile’s annual inflation eased broadly in line with forecasts in July, a month that ended with the central bank delivering a larger-than-expected interest rate cut and indicating more big reductions to come, Bloomberg News reported. Consumer prices rose 6.5% from a year prior, just above the 6.4% median estimate of analysts in a Bloomberg survey. Monthly inflation stood at 0.4%, the national statistics institute reported on Tuesday. A closely-watched price gauge that excludes volatile items increased 8.5% in 12 months and 0.3% from June.

The owners of Chilean salmon farmer Nova Austral SA have presented a debt restructuring plan that would transfer ownership to creditors — but it may pit bondholders against a bank, Bloomberg News reported. Nova Austral, owned by Norwegian private equity firm Altor Equity Partners, presented the plan Wednesday at a Chilean court. It proposes a $487 million capital increase to turn part of its debt into stock. Norway’s DNB Bank ASA, one of its largest creditors, will receive five shares for every dollar it’s owed.

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.