Interest Rate in Chile
Chile - Interest Rate
Central Bank slashes key rate to over nine-year low in September
At its 3 September monetary policy meeting, the board of the Central Bank of Chile (BCCh) unanimously decided to cut the key benchmark rate to 2.00% from 2.50% where it had sat since June. The move, which was in line with analysts’ expectations, marked the second rate cut this year and brought the key rate down to its lowest level since August 2010.
Contained inflation, weakening economic activity and more accommodative stances taken by global central banks were all behind September’s cut. Growth faltered in the second quarter, as the world’s top copper producer felt the pinch of cooling global demand and prices for the red metal amid the escalating trade dispute between China and the U.S. On top of that, softer private consumption dynamics drove a slowdown in the domestic economy in Q2.
With regards to price pressures, inflation has hovered near the lower bound of the Central Bank’s 2.0% to 4.0% target range in recent months, partly due to subdued services price inflation. The economy’s weak second-quarter performance, which reflected feeble consumer demand, pointed to a longer-than-expected convergence of inflation to its target, prompting the Bank to implement a 50-basis-point rate cut.
Looking ahead, policymakers reiterated the Bank’s commitment to a flexible monetary policy stance ahead, in order to reach the 3.0% inflation target in a two-year horizon. As such, further stimulus is likely, provided growth remains lackluster and inflationary risks stay at bay. This viewpoint is summarized by Lorena Palomeque and Daniel Velandia, economists at Credicorp Capital, who noted:
“This decision was in line with most expectations including ours. In fact, the market rates have already incorporated such a move, as the Swap Curve priced-in more than 80 bps of cuts for the next twelve months. Considering the explicit dovish bias of the Board, this scenario should not be discarded.”
The next monetary policy meeting is scheduled for 23 October.
LatinFocus Consensus Forecast panelists are still assessing the Bank’s decision. The current Consensus is for the policy rate to increase gradually going forward, ending 2019 at -% and 2020 at -%.
Chile - Interest Rate Data
|Policy Interest Rate (%)||4.50||3.00||3.50||3.50||2.50|
5 years of economic forecasts for more than 30 economic indicators.
Chile Interest Rate Chart
|Bond Yield||2.57||-0.44 %||Sep 04|
|Exchange Rate||722.8||0.05 %||Sep 04|
|Stock Market||24,044||-0.67 %||Sep 04|
Get a sample report showing our regional, country and commodities data and analysis.
Request a Trial
Start working with the reports used by the world’s major financial institutions, multinational enterprises & government agencies now. Click on the button below to get started.
October 8, 2019
Consumer prices saw no growth in September, following August’s 0.2% month-on-month increase.
October 4, 2019
The Adimark GfK consumer confidence index fell to 38.6 points in September from 39.4 points in August, thus falling further below the critical 50-point threshold that separates pessimism from optimism among Chilean consumers.
October 3, 2019
The business confidence index (IMCE), published by ICARE and the Adolfo Ibáñez University, edged down in September, coming in at 50.7 points (August: 51.0 points).
October 1, 2019
In August, the IMACEC economic activity index jumped 3.7% year-on-year, accelerating from July’s 3.2% increase and marking the strongest expansion since October 2018.
October 1, 2019
Although copper prices jumped in the first half of September on optimism over trade talks, they fell markedly thereafter, weighed on by lackluster economic data from China.