Chile surprises with one-point cut

The Central Bank of Chile surprised observers and markets with the size of the reduction in borrowing costs as data revealed that inflation plunged almost two percentage points in December.

Thursday's reduction of 100 basis points on takes the central bank's policy rate to 7.25%. Earlier in a survey conducted by Bloomberg 19 out of the 20 economists polled expected a smaller cut.

"This decision is grounded on the prospects of a significant fall in medium term inflation, due to the drastic cha

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