Central Bank of Chile Makes No Change in Policy

October 14, 2009

Chile’s policy interest rate as expected was kept steady at 0.5%  for the third straight monthly policy meeting.  From a peak of 8.25% at the start of 2009, the rate had previously been slashed by 600 basis points during the first quarter, 150 basis points in the second quarter, and 25 basis points in July.  A statement released by central bank officials reiterated that expected medium-term inflation remains stable, actual CPI inflation should ease in coming quarters, demand and production were again expanding last quarter, and the labor market is stable. It remains the view of officials that the present policy stance will be in place for a “prolonged period.”  That’s the same span indicated in the September statement from officials.  Consumer prices fell 1.0% in the year to August, a 10.3 percentage point downward swing from inflation of 9.3% in the prior statement year.  Real GDP fell 1.4% annualized in the second quarter and by 4.5% from the second quarter of 2008.The Chilean peso is around 12% stronger against the dollar than a year ago.

Copyright Larry Greenberg 2009.  All rights reserved.  No secondary distribution without express permission.


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