June saw the central bank warn that the easing cycle could start in the ‘short term’. A 50-75 bps rate cut is now expected at the 28 July rate meeting.

The central bank will cite inflation expectations anchored at 3% as the reason for the cut – even though core inflation is still 9% YoY. Chile may prove a test case for Latam FX and easing cycles.

Regarding Chile’s main export, Copper – we see it at neutral $8300-8600/MT this year. And we think USD/CLP stays near 800.