Chile Monetary Policy


Chile: Central Bank resumes tightening

February 17, 2011

At the latest monetary policy meeting held on 17 February, the Central Bank raised the policy rate by 25 basis points to 3.5%. The decision was not a surprise for market analysts, after the Central Bank paused the gradual tightening at its January meeting in order to assess the impact of the USD 12 billion foreign-exchange intervention plan. According to the Bank, rising international commodity prices, especially for food, pose inflationary pressure. However, the Bank claimed that ?inflation has behaved as expected and core inflation measures remain bounded?. The Bank also stated that economic activity, domestic demand and unemployment remain in line with expectations. The Central Bank reiterated that it will continue to reduce the current monetary stimulus over the coming months, as domestic and external sectors take positive strides.


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