By www.CentralBankNews.info Chile’s central bank held its policy rate steady at 5.0 percent as widely expected, saying indicators for the first quarter of 2013 show “decelerating output and demand” while inflationary expectations remain around the bank’s target.
The Central Bank of Chile, which last cut rates by 25 basis points in January 2012, also said the peso’s “exchange rate has depreciated; however in real terms it is still in the lower part of the range that is compatible with its long-term fundamentals.”
In its two previous statements, the central bank had mentioned the appreciation of the peso, fueling speculation that authorities were starting to consider intervening to weaken it, as in 2011.
Since the beginning of this year, the peso is largely unchanged and was quoted around 478 peso per U.S. dollar today. In early April it rose to around 465 per dollar when authorities expressed concern.
Chile’s inflation rate fell to 1.0 percent in April from 1.5 percent in March, below the central bank’s target of 2-4 percent.
Commenting on international financial conditions, the central bank said they had improved but the euro zone remains in recession and “in a fragile fiscal and financial situation” while there is increased optimism in the United States and Japan.
Indicators for China and other emerging economies point to marginally weaker growth while the U.S. dollar had appreciated and metal prices – Chile is the world’s largest copper producer – had again receded in recent weeks, especially for copper, the bank said.
Chile’s Gross Domestic Product expanded by 1.5 percent in the fourth quarter of last year from the third quarter for annual growth of 5.7 percent.
Earlier this month, Chile’s central bank governor said first quarter economic activity had declined faster than expected and the annual growth rate could ease to 4.4 percent.
The central bank expects Chile’s economy to grow around 5 percent this year compared with growth of 5.5 percent in 2012, down from 2011’s 5.9 percent.
www.CentralBankNews.info
