1Q26_ Quarterly Outlook Report_Final_EN - Flipbook - Page 105
T H E P LUMB LI N E | A RETU RN TO F I RS T PRI N CI PL ES
So-so labour market readings
4%
YoY change, 3mth mov. avg.
3%
2%
1%
0%
Employment
Real hourly wages
-1%
-2%
Jan 2023
Jun 2023
Nov 2023
Apr 2024
Sep 2024
Feb 2025
Jul 2025
Source: INE, Scotia Wealth Management.
An improvement in economic and social conditions would also reduce the odds of a bout of social
unrest akin to what took place in 2019-2020, which was a tailwind for Borić at the 2021 elections
(over Kast). If Chileans do not see positive economic results, they may not take well to a potentially
harsh conservative turn under Kast. Chileans also demand a reduction in crime, ranking the next
president’s ability to tackle crime and drug trafficking as the leading priority, higher than
economic, health, and social policy matters. A failure to deliver results on this front could affect
Kast’s standing among Chileans, especially given the public’s perception of him as being tough
on crime.
Tackling crime is a key demand by Chileans for the next government
70%
62%
% believe should be a priority for the next government
60%
50%
% mentioned as first priority
43%
39%
40%
30%
17%
20%
20%
7%
10%
17%
7%
14%
13%
5%
6%
6%
6%
3%
0%
Crime
Economy
Migration
Poverty
Health
Corruption
Education
3%
Pensions
Source: CADEM, Scotia Wealth Management.
On the monetary policy front, the range for Banco Central de Chile’s (BCCh’s) policy path is
relatively narrow, so whichever path it ultimately takes in the next few months is unlikely to make
a big difference for Chile’s markets or economy. The near-term trajectory may see one or no more
rate cuts; markets and economists are leaning in favour of one. However, what may end up being
more interesting is how long the BCCh keeps its overnight rate at a 4.25% or 4.50% level. Our local
team believes that the 4.25% level (following an additional cut) will hold over the forecast horizon
through 2027, but markets reflect slight odds that the BCCh will consider a rate hike sometime in
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