Chile Monetary Policy December 2016


Chile: Central Bank leaves rate unchanged in December

December 13, 2016

At its 13 December monetary policy meeting the Central Bank of Chile (BCC) kept the policy rate unchanged at 3.50%, where it has remained for the last 12 months. The decision was reached due to inflation being close to the Central Bank’s 3.0% target, with growth remaining fairly subdued.

Regarding the domestic economy, the BCC highlighted that recent data points towards a weak performance in Q4 2016 in mining and some sectors of industry, with demand continuing to rise at a similar rate to previous quarters and the labor market gradually adjusting to the lower-growth environment. Regarding price developments, the Bank commented that inflation in November was in line with expectations at 2.9%. The Bank expects medium-term inflation to be on target, although inflation in the next few months is forecast to be near the bottom end of the Bank’s target range of 2.0%-4.0%.

On the international front, the BCC commented that interest rates have increased throughout the developed world, with a parallel increase in oil prices and a moderate uptick in copper prices. The Central Bank highlighted the unchanged global economic outlook, with the effects of economic policy adjustments in developed countries still unclear. The BCC stressed that it stands ready to reduce interest rates if sluggish growth in Chile persists, while at the same time ensuring inflation remains around 3.0% in the medium term.

Panelists participating in the LatinFocus Consensus Forecast see the policy rate at 2.98% at the end of 2017. Panelists expect the policy rate to end 2018 at 3.49%.

Author:, Economist

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Chile Monetary Policy Chart

Chile Monetary Policy January 2017

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

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