50-Basis Point Hike of Chilean Monetary Policy Interest Rate
May 12, 2011
Few central bank interest rates have traced a U-shaped pattern quite as well as Chile’s. Seven consecutive monthly cuts from January through July of 2009 slashed the rate by 775 basis points to a cyclical low of 0.5% where it remained for eleven months. Beginning in June 2010, monetary officials have lifted their interest rate in eleven of the last dozen monthly meetings by a total of 450 basis points. Today’s increase of 50 basis points leaves such at 5.0% and was accompanied by a statement that more increases will be necessary but with other commentary that suggest a shallower upward trajectory from here. Inflation expectations remain above the 3% target but are subsiding, and commodity prices have fallen back lately. There are global growth risks as well. In Chile, however, growth of somewhat over 5% seems probable this year and next.
Copyright Larry Greenberg 2011. All rights reserved. No secondary distribution without express permission.
Tags: Chile
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