Fynsa
The Central Bank adjusts its economic projections, but maintains a cautious approach to global risks that could alter its monetary policy strategy in the coming months.
Despite the caution in monetary policy, short UF durations have clear advantages in terms of stability and profitability.
If we believe that the Central Bank will do everything necessary to achieve its goal, then market prices would not be consistent.
Based on historical averages, the economy could normalize, but political discussions and lack of market dynamism complicate the outlook.
We project a further 25bp cut at the December meeting, which would end 2024 at 5.0%. As we estimate the neutral rate at 4.25%, three more cuts should occur during the first half of next year, with room for some pauses only if needed due to the economic situation.
The Central Bank of Chile has resumed the reduction of interest rates, which has led to a greater relevance of the UF and short-term bonds as conservative investment alternatives.
As we and the market anticipated, the Central Bank Board unanimously decided at its October meeting to cut the monetary policy interest rate by 25 basis points, bringing it to 5.25%.
Local assets continue to offer an attractive risk/return ratio
We are already used to the fact that in September, while in Chile we are celebrating the Fiestas Patrias, the members of the board of governors of the Federal Reserve (FED) are working hard to decide on the monetary policy of the most important economy in the world.
The Central Bank published its September Monetary Policy Report, the famous IPoM. It came with several novelties, some of which we would like to highlight.
