Chile’s peso led losses among most Latin American currencies after becoming the region’s first major nation to slash interest rates, while Colombia’s peso hit a session low after its central bank kept rates unchanged.
Chile’s peso fell 1.1% to a nearly seven-month low. The central bank of this South American country slashed interest rates by 100 basis points in response to a faster-than-expected decline in inflation.
“Chile’s central bank will continue Interest rate cut at the same 100-bp pace in the future sessions, with rates finishing this year at 7.25%,” says Andres Abadia, chief Latin America economist at Pantheon Macroeconomics.
Colombia’s peso fell 0.2% after the country’s central bank unanimously maintained its rate for the second month in a row, despite inflation slowing but still being above the central bank’s 3% long-term objective.
The Brazilian real was trading flat as investors focused on a monetary policy announcement coming this week.
Last week, Brazilian Finance Minister Fernando Haddad stated that there is plenty of opportunity for a “reasonable” rate drop.
The International Monetary Fund’s (IMF) executive board stated that Brazil’s present monetary posture is “appropriate” and urged for ongoing forward-looking and data-dependent monetary policy.
According to a weekly central bank survey, Brazil’s private sector analysts predict the central bank’s benchmark rate to end 2024 at 9.25%, indicating further monetary easing than previously anticipated.
