Chile maintains 2˝% policy rate as no inflation surprises seen

By Wendy Van Sickle

Columbus, Ohio, Feb. 2 – The Central Bank of Chile’s board voted unanimously to maintain its monetary policy rate at 2˝%, according to a statement released on Thursday.

The bank said that emerging economies continue to perform well, with several of them having upwardly adjusted their growth outlooks for 2018. In most cases, inflation remains contained.

Most notable in the emerging world has been China’s surprising GDP growth in the fourth quarter of 2017.

In Latin America, activity has been in mixed directions, but inflation indicators have tended to stabilize, according to the bank.

Domestically, financial conditions remain favorable. Since the second half of December, long-term interest rates, stock prices and the exchange rates showed significant improvement, while lending interest rates persist near historic lows.

Both headline and CPI inflation remain around 2% annually.

The board said its decision estimates that incoming data is consistent with the baseline scenario of December’s report, although some of the risks have since diminished.

“In particular, the latest activity figures make it more likely that the economy will achieve the expected traction, while domestic financial conditions remain favorable,” the banks said.

“Thus, despite inflation expected to be somewhat below previous forecasts for some months, mainly due to the evolution of the exchange rate, the threats to its convergence to 3% have been attenuated in the margin.”

The banks said it will pay special attention to any signs of a delay in the convergence of inflation that might be cause for additional monetary impulse and that it remains committed to conducting monetary policy with flexibility to keep projected inflation at 3% over the two-year horizon.

© 2015 Prospect News.
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