Chile: Central Bank cuts policy rate by 25 basis points
October 17, 2013
At its 17 October meeting, the Central Bank decided to cut the policy rate by 25 basis points from 5.00% to 4.75%. The market had expected the Bank to leave the policy rate unchanged at 5.00%.
According to the Bank, the country's growth has moderated in line with the Bank's expectations that were declared in the last meeting's report. The slowdown came as a result of falling investment and decreasing domestic demand. Regarding price developments, the Bank acknowledged that, "inflation has evolved below projections, remaining in the lower part of the tolerance range." As a result, the Central Bank decided to cut the key rate in order to boost the economy.
LatinFocus Consensus Forecast panelists see the policy rate at 5.01% by the end of the year. Panelists expect the policy rate to end next year at 5.06%.
Author: Dirina Mançellari, Senior Economist