Chile Monetary Policy


Chile: Central Bank holds policy rate for the second consecutive month

August 18, 2011

At its 18 August monetary policy meeting, the Central Bank left the policy rate unchanged at 5.25%, in a move that matched market expectations. The decision marked the second consecutive month that the Bank left rates unchanged, as reduced inflationary expectations and volatile international markets gave the necessary room for a precautious halt in the tightening cycle. The Central Bank removed the hike bias statement that ended the previous communiques. Instead, the Bank announced that any future changes in the monetary policy rate will depend on the effects of domestic and external conditions on inflationary expectations, thus avoiding any direct reference to rate hikes. Moreover, on 23 August, the Bank's President Jose De Gregorio indicated that the Bank may even cut interest rates if ?the world decelerates enough to provoke a deceleration that exacerbates gaps and expands excess capacity?. The next policy meeting is scheduled for 15 September.


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