Chile Interest Rate Kept At 3.25%

The Chilean Central Bank left the key rate unchanged at 3.25 percent in February after cutting the Monetary Policy Rate (MPR) by 25 bps in January in an attempt to boost growth amid a slowdown in inflation. Annual inflation in January stood below the central bank’s target for the fourth consecutive month, coming at 2.8 percent year-on-year following a 2.7 percent reading in December. Policymakers also said that attending the current economic scenario, it will be probably necessary to boost the monetary impulse.
Central Bank of Chile | Luisa Carvalho | 2/15/2017 6:24:32 PM

Statement by the Central Bank of Chile:

Internationally, global financial conditions continued to improve and emerging economies’ asset prices have risen further, as the good performance of some economies in the region stands out. The price of copper rose, owing partly to supply- side factors. Oil has remained around the prices of a month ago. Global activity indicators continue to point to a recovery, especially in the developed world. Still, significant risks remain.

At home, annual inflation was 2.8%, consistent with forecasts in the last Monetary Policy Report. Inflation expectations at the end of the projection horizon are near target, although for the coming months they remain in the lower part of the tolerance range. Activity and demand indicators remain weak, while the labor market continues to show previous trends. Long-term interest rates fell and the peso appreciated.

The Board estimates that, in the most likely scenario, it will be necessary to boost the monetary impulse over the short term. At the same time, it reiterates its commitment to conduct monetary policy with flexibility, so that projected inflation stands at 3% over the policy horizon.

Chile Interest Rate Kept At 3.25%