Another Chilean Interest Rate Cut

October 17, 2014

Officials at the Central Bank of Chile announced late Thursday the eighth interest rate cut in a year.  The key rate was reduced previously in October and November of 2013 and February, March, July, August, and September of this year.  All these cuts have been by 25 basis points, and the benchmark is now 3.0% versus 5% prior to last October.  CPI inflation is targeted at 2-4% but has exceeded the target ceiling for the past six reported months including 4.9% in September.  Officials note that medium-term expected inflation is still anchored at the 3% target midpoint and project that actual inflation will return to the target corridor after several more months lying above such.  GDP growth is undynamic, and global growth and inflation face downside risks.  Copper and other commodity prices are falling, and so are interest rates in many economies.

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



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