Central Bank of Chile Interest Not Changed

December 11, 2014

Eight straight monetary policy interest rate cuts were implemented between January 2012 and September 2014, including five this year, but central bank officials have recently paid a little more attention to inflation, which is above the 2-4% target and likely to stay so “still for some months.”  According to statement today, “the evolution of prices will continue to be monitored with special attention. Medium-term inflation expectations remain around 3%.”  That happens also to be the current level of Bank of Chile’s interest rate.  With trends in output, demand and employment showing low dynamism, officials want to be sure that their baseline inflation forecast of lessening inflation eventually comes true.  This is a time to trust but verify.

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

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