By Central Bank News
Chile’s central bank left its policy interest rate steady at 5.0 percent, as expected, saying domestic output and demand was better than forecast while inflation expectations were in line with the target.
Banco Central de Chile affirmed its commitment to a flexible monetary policy to ensure than inflation is 3 percent – the bank’s target – and any “future changes in the monetary policy rate will depend on the implications of domestic and external macroeconomic conditions on the inflationary outlook.” The central bank, which has held rates steady since a 25 basis point cut in January, also said the labor market in Chile remains tight and the rise in consumer prices in October was due to one-time factors. “Inflation expectation over the policy horizon are aligned with the target,” the bank said in a statement following a meeting of its board. Chile’s inflation rate rose to 2.9 percent in October, the fourth monthly increase in a row. Chile’s Gross Domestic Product expanded by 1.7 percent in the second quarter from the first quarter, for an annual rate of 5.5 percent, up from 5.3 percent in first quarter. The bank said global financial conditions were “somewhat tighter than they were a month ago,” adding that the dollar had appreciated in international markets. It added that uncertainty persisted about the euro zone’s fiscal and financial situation, and the risk of a sharp fiscal adjustment in the U.S., and a resurgence of financial market tensions could not be ruled out.
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