Chile: Central Bank reduces policy rate
February 18, 2014
At its 18 February meeting, the Central Bank decided to cut the policy rate by 25 basis points. The Bank lowered the rate from 4.50% to 4.25%, a decision which was widely expected by the markets.
According to the Bank, economic activity and domestic demand have undershot expectations for growth. Regarding price developments, the Bank said that the latest inflation indicators are consistent with the expectation that the inflation rate will converge at the target within the monetary policy horizon. In addition, the currency has depreciated, while nominal wages are growing at a moderate pace.
LatinFocus Consensus Forecast panelists see the policy rate at 4.50% by the end of the year. Panelists expect the policy rate to end next year at 4.06%.
Author: Dirina Mançellari, Senior Economist