Central Bank of Chile Cuts Interest Rate to 3.0%
March 17, 2017
The Chilean monetary policy rate had been 3.5% for 13 months until a 25-basis point reduction in January, and now a second such cut has been engineered and statement released suggesting more easing may lie ahead: “if the recent trends of the economic scenario persist, and so do their implications on the medium-term inflation outlook, it could be necessary to increase the monetary impulse.” The two rate cuts this calendar quarter reverse a pair of similar-sized hikes in the final quarter of 2015. Officials worry about the weak trend in domestic demand, salaried employment and production. They note that while medium-term inflation expectations are aligned with the 3.0% inflation target, shorter-term price expectations have slipped under their tolerance range. Being confident that inflation should hover near their goal in the policy horizon, monetary policy is being utilized now to promote a little better growth. Persistent global risks cast some doubt over whether somewhat improved international economic trends can be sustained.
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Tags: Central Bank of Chile