Chile Monetary Policy


Central Bank continues to tighten the reins

At its latest monetary policy meeting on 14 June, the Central Bank raised the policy rate by 25 basis points to 5.25%, in line with market expectations. The hike marked a slower tightening pace after the Bank had increased rates by 50 basis points at its three previous meetings. According to the Bank, commodity prices remain high and concerns regarding financial risk in Europe have intensified. In addition, the Bank highlighted a reversal of private inflation expectations, which nonetheless remain above target. The next meeting is scheduled for 14 July. The Central Bank reiterated that it will continue to lift interest rates over the coming months, although the pace of increase will depend on inflationary expectations, indicating that the Bank may opt to pause its series of rate hikes initiated in May 2010 before tightening further towards the end of the year.


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