Central Bank of Chile

May 20, 2016

Chile’s May monetary policy meeting on May 17 resulted in no change to the policy interest rate, which has been at 3.5% since a 25-basis point increase last December, but the statement released by officials reaffirmed that more rate normalization will become necessary eventually.  December’s tightening was the second of the cycle following an initial 25-bp increase two months previously.  Nine 25-bp cuts from January 2010 to October 2014 had reduced the interest rate to 3.0% from 5.25%.  Expected inflation in the medium term is still consistent with the 3% target, but such is projected to remain “above 4% for some months.”  While first-quarter growth exceeded expectations, business sentiment has softened.  External risks persist.

Copyright 2016, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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