Chilean Monetary Policy Interest Rate Left at 0.50% as Expected

January 14, 2010

For the sixth month in a row, the Central Bank of Chile left its interest rate at 0.5%.  From a peak level of 8.25% over the final four months of 2008, monetary officials had previously cut the rate last year by 100 basis points in January, 250 bps each in February and March, 50 bps each in April, May and June and one final time on July 9 by 25 basis points to the current level.  A statement released today by officials reiterated the intent to retain this minimum level of 0.5% at least until the second quarter.  On-year CPI inflation continues to be negative and is projected to trend lower, although medium-term price expectations remain stable.  The inflation target is 3%.  GDP rose 0.9% at an annualized pace in the third quarter and was still negative at minus 1.6% when compared to the same quarter of 2008.  Industrial production in November was only 1% greater than a year before.  Jobs are again rising, and the unemployment rate 9.1% is falling.  Bank lending is deemed to be less stringent.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.



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