Scotiabank Previews This Week's Policy Meetings at The Central Banks of Chile, Brazil

10:04 AM EDT, 06/17/2025 (MT Newswires) -- Chile's central bank (BCCh) is expected to hold its overnight rate target at 5% with risk of a cut on Tuesday, said Scotiabank.

The bank expects a 25bps cut. Minutes to the prior meeting left open the option to cut at this meeting based on developments such as softening inflation with headline falling to 4.4% year over year in May.

Whether that's enough to motivate BCCh to come off the sidelines where it has stood since the start of this year isn't clear, stated Scotiabank.

Brazil's central bank (BCB) policy decision could be the trickiest call over the hike cycle to date, pointed out Scotiabank. Consensus leans toward holding the Selic rate at 14.75% but a notable minority thinks there could be another 25bps hike on Wednesday.

A cumulative 425bps of hikes have been delivered since they began in September 2024. They started at a 25bps clip, and then three straight 50bps hikes were delivered before shifting down to a 25bps increase in early May.

Now the uncertainty stems from the lack of clear forward guidance in the May statement that stood in contrast to the explicit guidance that was being providing over prior statements. This one said:

"For the next meeting, the scenario of heightened uncertainty, combined with the advanced stage of the current monetary policy cycle and its cumulative impacts yet to be observed, requires additional caution in the monetary policy action and flexibility to incorporate data that impact the inflation outlook."

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