Chile Central Bank keeps rate unchanged at 5 pct

By Central Bank News
The Central Bank of Chile kept its benchmark interest rate unchanged at 5.0 percent for the fifth month running, despite weaker global growth and growing risk aversion in global financial markets.
“Internationally, the financial and fiscal problems in the Eurozone continue to intensify, and uncertainty about their resolution has increased,” Banco Central de Chile said following a monthly meeting of its board.
“Economic indicators in the United States, China and other emerging economies have been weaker than forecast by market consensus,” the bank said, noting that commodity prices, including copper, oil and foodstuffs, have continued falling.

But domestic output and demand is expanding and the labour market remains tight. Inflation expectations remain close to the bank’s target, it said.

Some economists are expecting Chile’s central bank to start easing monetary policy in coming months to help counter the effects of the global economic slowdown on the export-dependent country, the world’s largest copper exporter.

The central bank’s board, which meets monthly, last cut its policy rate by 25 basis points in January. The bank targets the nominal interbank rate, known as the monetary policy rate TPM, through open market operations.

Since 2007, the objective of Chile’s central bank is to maintain the annual inflation rate around three percent, with a range of plus or minus one percentage point, over a two-year horizon.