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Central Banks

Chile Set to Spearhead Global Rate Cuts as Boom Turns to Bust

  • Rate swaps price in 560 basis points of cuts in 12 months
  • The central bank has paused its rate hikes as inflation slows

Chile is set to lead the world into a steep interest rate cutting cycle next year as inflation slows and its economy goes from boom to bust, according to swap markets.

Traders are forecasting more than 5 percentage points in cuts in the next 12 months after a surprise inflation print last month and as the economy teeters on the edge of recession, following the fastest growth on record in 2021. Only one other nation comes even close to that -- Hungary -- while many others will continue raising rates.