Chile Keeps Key Rate on Hold

The Central Bank of Chile left its benchmark interest rate unchanged at 3.5 percent for the third straight meeting in March of 2016 as expected. Policymakers said will consider measured adjustments to the interest rate aiming to bring inflation back to target, suggesting future hikes.

Statement by the Central Bank of Chile:

International financial markets have been calmer in recent weeks, despite the present risk of new episodes of volatility. Thus, risk premiums have fallen, while stock indexes and commodity prices have risen. Meanwhile, forecasts for world growth and developed economies’ inflation have been downsized again. In this context, developed world central banks have taken action or made announcements indicating more expansionary monetary policies. Following the Federal Reserve’s meeting, the dollar depreciated further and interest rates declined.

On the domestic front, annual CPI and CPIEFE inflation remains above 4%, in line with projections. Inflation expectations two years out remain at 3%. The evolution of these variables will continue to be monitored with special attention. Available output and demand data reveal a weaker performance in late 2015 than was foreseen in the December Monetary Policy Report. Confidence indicators are still in pessimistic territory. The annual growth rate of salaried employment decelerated further, but unemployment remains low. The pace of annual wage growth picked up in January.

The future path of the monetary policy rate considers measured adjustments aimed to ensure the convergence of inflation to the target, at a pace that will depend on incoming information and its implications. The Board reiterates its commitment to conduct monetary policy with flexibility, so that projected inflation stands at 3% over the policy horizon.

Chile Keeps Key Rate on Hold

Central Bank of Chile | Mojdeh Kazemi |
3/18/2016 2:14:54 PM