Chile Monetary Policy


Chile: Central Bank holds rate in November

November 12, 2015

At its meeting on 12 November, the Central Bank of Chile (BCCH) decided to leave the policy rate unchanged at 3.25%. The decision followed last month’s 25 basis point hike and met the expectations of market analysts. The Bank also left the door open for further rate hikes in the future and signaled that a future hike may occur to bring inflation back to the 3.0% target.

As for international developments, the Bank pointed out that recent data confirms that growth remains uneven across countries, with more dynamic results seen in developed economies and weaker figures in emerging economies. The Bank added that it appears more likely that the first Federal Reserve hike will occur in December and that “risks of possible disruptions in the markets persist.”

Regarding Chile, the Bank noted that inflation came in higher than expected in October. The Bank emphasized that it will continue to monitor inflation and core inflation closely and that expectations for two years ahead remain at 3.0%. Regarding the economy, the Bank noted that Q3 data suggest that output and demand are moving in line with forecasts and that labor market data remains dynamic. However, the Bank pointed out that confidence indicators remain in pessimistic territory.

In conclusion, the Bank stated that the monetary policy will remain focused on bringing inflation to the target. Moreover, the Bank emphasized, “its commitment to conduct monetary policy with flexibility, so that projected inflation stands at 3% over the policy horizon.”

Panelists participating in the LatinFocus Consensus Forecast see the policy rate at 3.38% at the end of 2015. Panelists expect the policy rate to end 2016 at 3.75%.

Author: Teresa Kersting, Economist

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Chile Monetary Policy Chart

Chile Monetary Policy November 2015

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

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