Central bank of Chile: Policy Again Left Unchanged

January 17, 2013

The last change in the monetary policy rate was implemented a year ago with a cut of 25 basis points to 5.0% that reversed the final increase in a string of twelve hikes implemented between June 2010 and June 2011.  At only one of those monthly policy meetings did officials fail to tighten policy in a great normalization that in total raised the rate from 0.5% to 5.25%.  A new statement from the 4-person policy committee makes the same points as did the December statement.

  • Global financial conditions continue to improve.
  • Global risks related to the U.S. fiscal situation and the Ezone debt mess could still arise.
  • Domestic output and demand trends are evolving essentially as bank officials had assumed they would.
  • Total and core CPI inflation rates are now below 2%, and expected inflation is aligned with the Bank’s target.
  • The labor market is tight.
  • Future policy will be data driven, reflecting the evolution of demand and its impact on inflation.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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