Chile Monetary Policy


Chile: Central Bank stays put again

August 13, 2015

The Central Bank of Chile decided to keep the policy rate unchanged at 3.00% at its meeting on 13 August. The decision was in line with market expectations and marked the 10th consecutive meeting in which the Bank has kept the policy rate unchanged.

On the international front, the Bank highlighted that global financial markets have been “highly volatile,” that the currencies of emerging economies continued to weaken and that risk premiums rose. Moreover, in the Bank’s view, the outlook for global economic growth moderated, partly owing to recent developments in China that are particularly relevant for commodity exporting countries such as Chile. The Bank added that prices for fuel and copper continued to fall and that the Chilean peso weakened.

Regarding price developments, the Bank noted that inflation remained high at above 4.0%—which exceeds the Bank’s 3.0% target—and that inflation will likely stay at this level for longer than previously expected. The Bank added that it will monitor market expectations for inflation “with special attention,” noting that market expectations for the next year continued to rise, while they stabilized regarding inflation in two years. At the same time, the Central Bank pointed out several developments that suggest weaker than previously expected economic growth: both output and demand were lower than projected and expectations for private consumption growth moderated. Meanwhile, wage growth and private job creation were broadly unchanged. The next monetary policy meeting is scheduled for 15 September.

LatinFocus Consensus Forecast panelists see the policy rate at 2.98% at the end of 2015. Panelists expect the policy rate to end 2016 at 3.58%.

Author: Teresa Kersting, Economist

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Chile Monetary Policy Chart

Chile Monetary Policy August 2015

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

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