Chile Monetary Policy September 2016


Chile: Central Bank holds rate at 3.50% in September

September 15, 2016

At its meeting on 15 September, the Central Bank of Chile (BCC) kept the policy rate unchanged at 3.50%, where it has rested since the Bank’s December rate hike of 25 basis points. The decision to keep the policy rate at its current level came in a context of slowing inflation and economic weakness in Q3.

About the Chilean economy, the BCC stated that inflation in August developed in line with its expectation, falling to 3.4%, and that it is forecast to be close to the BCC’s 3.0% inflation target in two years. Meanwhile, high-frequency indicators point to economic weakness, with faltering demand and output, in Q3. Confidence indicators remain depressed and the labor market is deteriorating gradually.

On the international stage, the BCC pointed out that financial market movements centered on the Federal Reserve Bank’s interest rate decision. Overall, the Bank assessed that monetary and financial conditions were encouraging. As for global growth, the BCC highlighted weakness in U.S. economic activity and a pickup in China. Meanwhile, prices for copper and oil were broadly stable compared to the previous month.

The Bank reaffirmed that its monetary policy will remain focused on ensuring that inflation will meet its target and maintained a neutral stance on its future monetary policy decisions. The next meeting is scheduled for 18 October.

Panelists participating in the LatinFocus Consensus Forecast see the policy rate at 3.48% at the end of 2016. Panelists expect the policy rate to end 2017 at 3.45%.

Author: Teresa Kersting, Economist

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Chile Monetary Policy Chart

Chile Monetary Policy September 2016

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

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