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Peru and Chile: limited room for interest rate cuts this year

The central bank of Chile (BCC) last night cut interest rates in response to a pronounced slowdown in economic growth, while Peruvian interest rates were left on hold after a pick-up in activity at the end of last year. Both economies are set for a period of weaker economic growth as the commodities boom come to an end. But large current account deficits, combined with weakening currencies, will limit the scope for monetary easing.

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