Chile slashes rates to 4.75%

The Central Bank of Chile confounded market expectations by reducing the cost of borrowing by a full two-and-half- percentage points on Thursday.

Markets had priced in a fall but of only 1-1.5 points, but the combination of data showing that the "severe global economic slowdown" had "deepened beyond expectations" with the prospect of a significant fall in inflation led the central bank to make the drastic cut.

Domestically, employment has slowed and tight lending conditions persist, the central

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