Central Bank of Chile maintains monetary policy rate at 5¼%

By Toni Weeks

San Diego, Aug. 19 - The Central Bank of Chile said its board decided to maintain the monetary policy interest rate at 5¼% at its monthly monetary policy meeting on Thursday.

The bank noted that international activity indicators confirm a slower pace of growth in the United States and Europe, and consensus forecasts for these economies have been revised downward. Concerns about financial risks have intensified, especially in the euro zone, which has triggered a widespread increase in financial volatility and risk aversion, with a "significant adjustment" of asset prices.

Medium-term inflation expectations have declined globally, while prospects of interest rate normalization in advanced economies have been postponed again, according to a bank news release.

Domestic output, demand and labor market figures are evolving strongly and are showing signs of moderation at the margin, the bank noted.

Consumer Price Index inflation has hovered around 3% year over year, while measures of core inflation remain bounded. Inflation expectations show a significant decline and are close to the target. The board said it will continue to conduct monetary policy so that projected inflation stands at 3% over the policy horizon.

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