Chile increases policy rate to 3¼%; projected inflation stands at 3%

By Marisa Wong

Morgantown, W.Va., Oct. 16 – The board of the Central Bank of Chile decided to raise the monetary policy interest rate by 25 basis points to 3¼% at its monthly meeting, according to a Thursday press release.

The bank reported that September’s CPI inflation was lower than expected, but annual inflation – headline and core – is expected to remain high, in line with forecasts in its last monetary policy report.

Inflation expectations two years ahead are at 3%, and their evolution will continue to be monitored with special attention, the board said.

In August, activity fell short of expectations, unexpectedly from the mining sector. Demand indicators are still weak. Confidence indicators posted a marginal increase, but remain in pessimistic territory. Private job creation is still dynamic and annual wage growth has slowed, the release noted.

The board stressed that it is committed to conducting monetary policy with flexibility, so that projected inflation stands at 3% over the policy horizon.

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