Central Bank of Chile Eases

February 19, 2014

Chile’s policy interest rate has been reduced by 25 basis points for the third time in five months, and the forward guidance retains an easing bias:  “The Board estimates that in the coming months it might be necessary to increase the monetary stimulus to ensure that projected inflation will stand at 3% in the policy horizon.”  The rate now becomes 4.25%.  CPI inflation stands at 2.8% but is expected to slow later this year.  The latest statement from the central bank Board observes that “domestic output and demand have grown less than assumed in the Monetary Policy Report, particularly in investment-related sectors” and points out that subdued wages are neutralizing any inflationary effect from peso depreciation.  The peso hasn’t been immune to the risk factor of increased emerging market volatility.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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