Chile keeps policy rate at 3½%, says core inflation sticks close to 5%

By Angela McDaniels

Tacoma, Wash., Jan. 14 – The board of the Central Bank of Chile decided to maintain the monetary policy interest rate at 3½%, according to a bank notice.

The board said that world activity indicators show no significant changes compared to last month’s scenario.

On the domestic front, December’s monthly CPI inflation was somewhat lower than the board expected and was above 4% again in annual terms. Core inflation is still close to 5% year over year.

Meanwhile, inflation expectations two years out remain 3%.

According to the board, available fourth-quarter data continues to show limited growth in domestic output and demand, confidence indicators remain in pessimistic territory, unemployment remains low and annual wage growth was slightly less than in previous months.

The board reiterated its commitment to conduct monetary policy with flexibility so that projected inflation stands at 3% over the policy horizon.

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