By www.CentralBankNews.info Chile’s central bank held its policy rate steady at 5.0 percent, as widely expected, with inflation expectations in line with the central bank’s target but economic activity in February below market expectations.
The Central Bank of Chile, which last cut rates by 25 basis points in January 2012, said prices of raw materials had receded in recent weeks, including copper. Chile is the world’s largest copper exporter.
International financial conditions remain stable but economic indicators have been mixed in the United States while recession continues in the euro zone and the Bank of Japan has announced a “major program of quantitative easing, which is reflected in a deprecation of the yen,” the bank said.
“The labor market remains tight and domestic demand remains buoyant,” the bank said, adding that credit conditions were more restrictive.
Chile’s inflation rate rose slightly to 1.5 percent in March from February’s 1.3 percent but was down from January’s 1.6 percent. The central bank targets inflation in a range of 2.0-4.0 percent.
Chile’s Gross Domestic Product rose by 1.5 percent in the fourth quarter from the third quarter for annual growth of 5.7 percent, steady from the third and second quarter’s growth rates of 5.8 percent and 5.7 percent, respectively.
The central bank’s latest poll of economists showed that interest rates were expected to remain unchanged at today’s meeting and for the rest of this year before rising by 25 basis points to 5.25 percent in two years. This forecast is slightly down from February’s poll which showed interest rates rising to 5.50 percent by March 2015.
