By Central Bank News
The central bank of Chile kept its benchmark overnight interest rate unchanged at 5.0 percent, as widely expected, citing strong domestic consumption and inflation below the bank’s target.
Banco Central de Chile, which has kept its rate steady since January, noted an improvement in global financial financial conditions and tensions in the euro zone, but added there was still uncertainty about the implementation of the measures and “a resurgence of tensions in the coming months cannot be ruled out.”
The bank said the latest data confirm it’s outlook for slow economic growth in developed economies and a slowdown in the main emerging economies.
“Domestically, output indicators have evolved around trend rates and private consumption has strengthened,” the central bank said in a statement after a meeting of its Monetary Policy Committee.
Chile’s Gross Domestic Product expanded by 1.7 percent in the second quarter from the first for an annual growth rate of 5.5 percent, up from 5.3 percent.
The annual inflation rate in September rose to 2.8 percent, up from 2.6 percent in August, below the central bank’s 3.0 percent target.
Last month the central bank raised its 2012 growth forecast to 4.75-5.25 percent, from 4-5 percent previously, and cut the inflation forecast to 2.5 percent from 2.7 percent.
Economist had overwhelmingly expected the central bank to keep rates steady following the minutes of last month’s meeting which showed that the bank’s board members had only considered keeping rates on hold and the decision was unanimous.
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