Chilean Monetary Policy Still on Hold
August 16, 2012
The Central Bank of Chile’s Policy Board kept its monetary policy rate at 5.0% as expected. It has been at that level since a solitary 25-basis point cut in mid-January, which was a pre-emptive action taken in response to intensifying global risks caused by the European crisis. A statement released today observed some lessening of Ezone and global financial tensions and somewhat stronger-than-forecast recent growth in Chilean demand and production. The peso, which had previously depreciated, has shown a better bid tone lately, and both headline and core inflation are below the 3.0% medium-term target. Consumer prices went up 2.8% between mid-2011 and mid-2012. Officials nonetheless warned that a fresh upsurge of euro area tensions remains possible and said that future policy would be guided by the impact of developments on Chilean inflation prospects vis-a-vis the goal of 3.0%.
Prior to January’s 25-basis point rate cut, the key interest rate had stood at 5.25% for seven months, having been raised seven times from June 2010 to December 2010 by a total of 275 basis points and a further five times from February 2011 to June 2011 by 200 basis points. The rate bottomed at 0.50% in the Great Recession. Chile has Latin America’s fifth largest economy.
Copyright 2012, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Chilean monetary policy
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