Chilean Peso Drops on Prospects for Interest Rate Cuts

The Chilean peso fell today after the nation’s central bank kept its key interest rate unchanged yesterday, but suggested than an interest rate cuts are possible in the future.
The Central Bank of Chile kept its monetary policy interest rate at 4.5 percent on yesterday’s policy meeting. The central bank had a rather positive outlook for the US and European economies, while the view on the domestic economy was much grimmer:

The Chilean economy has continued to lose strength.

Therefore the bank noted that monetary loosening is likely in the future:

The Board estimates that in the coming months it might be necessary to increase the monetary stimulus to ensure that projected inflation will stand at 3% in the policy horizon.

USD/CLP rose from 533.50 to 534.65 as of 12:30 GMT today.

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