INSTANT VIEW-Chile central bank unexpectedly cuts rate to boost growth
SANTIAGO, Oct 17 (Reuters) - Chile's central bank cut its interest rate to 4.75 percent on Thursday in a surprise move to stimulate the Andean country's easing economic growth.
GEORGE LEI, ECONOMIST, NOMURA SECURITIES
"The (central bank) finally pulled the trigger after being in an easing mode for five months... Yet the BCCh was not very successful, at least in the communiqué, in explaining "why now?", which is the major surprise. One explanation could be due to the upcoming presidential election on Nov. 17, as the BCCh might not want to be perceived as adjusting monetary policy on Nov. 19, a time so close to the election.
"We continue to believe this cut signals the beginning of an easing cycle, which should eventually take the (rate) to 4 percent. We also believe the next cut will be data-dependent, not just on past data but more importantly on forward-looking measures."
TIAGO SEVERO, ECONOMIST, GOLDMAN SACHS
"We see the apparent contrast between the lack of significant changes in the policy statement and the decision to change course and finally cut the policy rate as a natural consequence of the central bank's easing bias reiterated over the last several months."
"The policy statement did not provide clear guidance with respect to the MPC's next steps. We assess a significant probability of another 25bp rate cut during one of the next two MPC meetings, consistent with our originally held view. Additional softening in the leading indicators of activity to be published over the coming weeks could tilt the balance of risks towards an earlier move in November."
DIEGO BOBADILLA, ECONOMIST, BANCO PENTA
"It's surprising in the sense that conditions aren't very different to (the past). The difference is due to a recognition of international turbulence, especially the situation in the United States."
"While the movement isn't extreme or significant, it is surprising.... It will have a weakening effect on the peso."
SEBASTIAN SENZACQUA, ECONOMIST, BICE INVERSIONES
"We think the downward cycle, though it will happen, will be fairly monitored and fairly controlled, with a strong focus on external sector indicators."
"As the decision was unexpected, we could see important movements in the local financial markets, principally in fixed income."
LUIS FELIPE ALARCON, ECONOMIST, BCI
"They've removed the downward bias (present in previous statements) from the last paragraph... It suggests they will proceed slowly, perhaps they're letting the market know a movement won't happen next month ... It will depend more on what they say in the quarterly monetary policy report (IPoM)."
"We think the central bank's decision is consistent with its inflation mandate, the current levels of the current account deficit and the deterioration of domestic demand."
(Reporting by Felipe Iturrieta, Fabian Cambero Anthony Esposito and Alexandra Ulmer; Editing by Ken Wills)