By CentralBankNews.info
Chile’s central bank left its policy rate steady at 3.5 percent but once again said it believes it has to continue to normalize its policy stance – a phrase used to signal monetary tightening – in order to ensure that inflation converges towards its target.
But the Central Bank of Chile, which raised its rate twice last year by a total of 50 basis points, again added that significant deviations of inflation from this convergence could alter its path.
Chile’s inflation rate has been steady for the last three months at 4.2 percent though the central bank said it was “somewhat” higher than expected in June. Inflation expectations two years ahead remain at 3.0 percent.
The central bank targets inflation at 3.0 percent, plus/minus 1 percentage point.
As in recent months, the central bank said it would continue to monitor inflation and inflation expectations “with special attention.”
The central bank added that data for the second quarter showed limited economic growth, with confidence indices still at pessimistic levels and the labour market has continued to deteriorate while the peso has appreciated.
Chile’s Gross Domestic Product rose by 2 percent in the second quarter, up from 1.3 percent in the first quarter.
After depreciating from May 2013 to mid-January this year, the peso has strengthened and was trading at 650.2 to the U.S. dollar today, up 8.9 percent this year.
