Deflation Reaffirms Our Interest Rate Outlook

To read the full article, please choose one of the following options:

The Chilean economy remains firmly in deflationary territory, reinforcing our belief that interest rates will remain at their current record low of 0.50% until at least H210. While we expect a robust bounce in economic activity in 2010, we note that inflation will unlikely present a major concern for monetary policymakers, and thus see only a moderate tightening cycle of 200 basis points to 2.50% by end-2010.