Chile Monetary Policy


Central Bank keeps policy rate unchanged

At its 11 December meeting, the Central Bank decided to keep the policy rate at 3.00%. The decision was expected by the markets. This is the second consecutive meeting in which the Bank has kept the policy rate unchanged following two meetings in which it cut its benchmark interest rate in an effort to support economic growth.

On the international front, the Bank stated that the growth prospects for the United States are improving, while the Eurozone and Japanese economies remain sluggish; recent economic data show slower growth and low levels of inflation. Regarding commodity prices, oil prices continued to drop, while copper prices recorded a smaller decline.

On the domestic front, low output and sluggish demand confirm that the economy is underperforming. In regard to price developments, the Bank said that annual inflation has dropped, but that it still remains above 5.0%. According to the Bank, “in the most likely scenario inflation will stay above the upper bound of the tolerance range still for some months. […] Medium-term inflation expectations remain around 3%.”

LatinFocus Consensus Forecast panelists see the policy rate at 3.00% at the end of 2014. Panelists expect the policy rate to end 2015 at 2.94%.

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Chile Monetary Policy Chart

Chile Monetary Policy December 2014

Note: Monetary Policy Rate (TMP, Tasa de Politica Monetaria) in %
Source: Chile Central Bank (BCC)

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