Chile Monetary Policy


Inflation rises further in April; expected to fall in the second half of the year

At its 16 May meeting, the Central Bank left the policy rate unchanged at 5.00%, a decision that was widely expected by the market amid easing inflation and a strengthening Chilean peso. Policy makers last changed the policy rate in January 2012, with a cut of 25 basis points.

In its statement, the Bank noted that international financial conditions show some improvement. The Eurozone remains in recession and is in a fragile fiscal situation, while data from Japan and the United States are more optimistic. In addition, the Bank underlined that prices for copper receded in recent weeks. On the domestic front, monetary authorities noted that the economy showed decelerating output and demand in the first quarter, with the labour market still remaining tight. Regarding the inflation outlook, the board sees headline and core inflation remaining in line with its 3.0% target in the policy horizon. The next policy meeting is scheduled for 13 June.

LatinFocus Consensus Forecast panellists see the policy rate at 5.01% by the end of the year. Next year, panellists expect the policy rate to end the year at 5.06%.


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Chile Monetary Policy Chart

Chile Monetary Policy May 2013

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

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