Chile's August growth number shows why tightening won’t be easy decision

Chile's August growth number simply raised the uncertainty about whether the economy has bottomed yet. Simultaneously, it also means that that inflation situation will be the only concern in the near term if the BCCh indeed decides to remove the monetary accommodation as they suggested at the September meeting. 

Clearly, the growth situation demands continued monetary accommodation if not additional easing. With the prospect of immediate Fed tightening subsiding following the September labour data release in the US. 

"The BCCh is expected to adopt a wait-and-watch policy in the next few months rather than rushing into tightening given the current state of the economy. As a result, some downside risks are seen that BCCh may in fact not raise rates at all this year (compared with our recently revised forecast of one rate hike in Q4 15)", says Societe Generale.