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Chile Monetary Policy September 2020

Chile: Central Bank stands pat in September

At its monetary policy meeting on 1 September, 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 came in line with analysts’ expectations and included the continuation of unconventional liquidity measures to support the economy.

Moderate inflation and some stabilization in economic activity following the blow dealt by the Covid-19 pandemic in March–May drove the Central Bank’s decision to leave the monetary policy rate at its technical minimum. Moreover, the Bank’s continuation of its unconventional asset purchase program should further bolster activity.

Looking ahead, the Bank reiterated its intention to maintain the policy rate at 0.50% for much of the two-year monetary policy horizon and confirmed that it stood ready to intensify monetary stimulus with additional tools if necessary. Meanwhile, policymakers expect inflation to remain modest for an extended period of time, amid weak economic activity and sustained uncertainty stemming from possible further outbreaks of the virus.

The next monetary policy meeting is scheduled for 14–15 October.

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