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Chile Monetary Policy January 2021

Chile: Central Bank stands pat in January

At its 26–27 January meeting, the board of the Central Bank of Chile unanimously decided to keep the monetary policy rate unchanged at 0.50%, its lowest point since 2009. The decision matched market analysts’ expectations and included the continuation of unconventional liquidity measures to support the economy. Specifically, the Bank decided to open the third phase of its Financing Facility Conditional on Increased Lending (FCIC), which will amount to USD 10 billion for six months and will include an expansion in the eligible collaterals.

Steady inflationary pressures in November-December and an incipient, albeit still uneven, economic recovery following Q3’s bounce-back supported the Central Bank’s decision to maintain its ultra-loose monetary policy stance. On top of that, the Bank’s continuation of its unconventional asset purchase program should meet the financial needs of companies as the recovery gains traction, supporting activity.

Moving forward, the Bank reaffirmed its intention to maintain the policy rate at 0.50% for most of the two-year monetary policy horizon and stated that it will “maintain the reinvestment policy of the bank bond stock program announced in December”.

The next monetary policy meeting is scheduled for 29–30 March.

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