Chilean Monetary Tightening Paused Temporarily

July 14, 2011

The Bank of Chile did not raise its key interest rate for just the second time in 14 consecutive monthly meetings, the other time being last January.  The rate will stay at 5.25%, 475 basis points higher than the recessionary low of 0.5% but 300 basis points below the last cyclical peak of 8.25%.  A statement on the central bank web site clearly indicates that more tightening is probable in the future despite some moderation of domestic demand and inflation that is currently hovering around the middle of the inflation target of 3% give or take a percentage point. 

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.



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