Chile holds policy rate at 2½% as inflation expectations unchanged

By Wendy Van Sickle

Columbus, Ohio, May 4 – The Central Bank of Chile’s board voted unanimously to keep its monetary policy rate unchanged at 2½%.

The bank said in a statement that growth prospects in developed economies have stabilized at figures higher than last year’s, although several developed countries “have seen a moderation of their earlier optimism.”

Among emerging economies, the bank said China’s first-quarter GDP remained as dynamic as the quarter before, while in Latin America activity has shown mixed results.

On the domestic front, the bank said the latest data on activity and demand is consistent with the baseline scenario of the March report. First-quarter activity growth was significantly influenced by the increase in mining, as activity in the other sectors maintained the better performance of previous months.

Annual CPI inflation declined to 1.8% in March, while core inflation remained at 1.6%.

Inflation expectations showed no significant changes, and expectations one year ahead stand at between 2.5% and 2.7% and two years ahead at between 2.8% and 3%.

“The board’s decision considered that inflation will remain low during the better part of 2018, to then advance more robustly toward the target during next year, consistently with a gradual closure of capacity gaps,” the bank’s statement said.

“The board foresees that it will keep the monetary stimulus at its current level until macroeconomic conditions tend to consolidate the convergence of inflation towards 3%.”

© 2015 Prospect News.
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