Central Bank of Chile Lowers Key Rate to 3%

At its October 16th meeting, Central Bank of Chile decided to cut the monetary policy rate for the fourth straight meeting by 25 bps to 3 percent, aiming to boost weak growth.

Statement by the Central Bank of Chile:

Internationally, recent indicators suggest that, in the incoming quarters, world growth and inflation could be somewhat lower than expected. The prices of commodities, including copper, have declined, with a notorious drop in world fuel prices. Most recently, interest rates have fallen in developed countries, while volatility has increased in financial markets. Most emerging economies are showing higher risk premiums and depreciated currencies.

Output, demand and employment indicators continue to reveal the low dynamism of the Chilean economy, in line with forecasts. Local financing conditions reflect the impact of the monetary stimulus. September’s inflation was again higher than expected, at 4.9% y-o-y. The most likely scenario assumes that inflation will stay above the upper bound of the tolerance range still for some months, to later return to the target. This evolution will continue to be monitored with special attention. Medium-term inflation expectations have remained around 3%.

The Board reiterates its commitment to conduct monetary policy with flexibility so that projected inflation stands at 3% over the policy horizon. Any future changes in the monetary policy rate will depend on the implications of domestic and external macroeconomic conditions on the inflationary outlook.

Central Bank of Chile Lowers Key Rate to 3%

Central Bank of Chile | Joana Taborda | joana.taborda@tradingeconomics.com
10/16/2014 10:29:15 PM