Chile: Central Bank continues to raise interest rates
December 17, 2010
At the last policy meeting of the year, held on 16 December, the Central Bank of Chile lifted the policy rate by 25 basis points from 3.00% to 3.25%, in a move widely expected by the market. The decision follows on a 25 basis point increase in November and marks the seventh consecutive monthly increase since June 2010. According to the Bank, European debt risks remain a concern in international financial markets and the slow recovery in developed countries weighs on the future prospects of emerging economies. Meanwhile, the appreciation of the peso is reducing price pressures from abroad, prompting inflation to remain below expected levels. However, monetary authorities added that economic activity continues to expand at a robust pace, which threatens to push inflation above the Bank's 3.0% target next year. The Central Bank stated that it will continue to reduce the current monetary stimulus over the coming months.