Chile Inflation Drops Most in Decade, Spurring Bets on Sharper Rate Cuts
• Chilean consumer prices posted an unexpected 0.5% monthly drop in December, the biggest in over a decade, boosting odds of sharper interest rate cuts
• Annual inflation eased to 3.9% in December, moving closer to the central bank's 3% target
• The surprise drop increases chances of the central bank cutting rates by more than 75 basis points at its January 31 meeting
• Two-year swap rates, measuring policy expectations, tumbled 24 basis points to 4.97%, the lowest since November 2021
• Analysts say there is still room for monetary policy to "catch up" through further significant rate cuts to boost weak consumer demand