Chile’s central bank left its monetary policy rate steady for the second month but said the current state of the economy “requires an intensification of the monetary boost” and expanded its asset purchases and other incentives to businesses to stimulate economic activity further.
The Central Bank of Chile (CBC) maintained its monetary policy rate at 0.50 percent, the level if it described as a “technical minimum.”
CBC has already cut its policy rate by 125 basis points this year following two rate cuts in March and by 250 points since June 2019 when it embarked on a monetary easing cycle.
Chile’s central bank said it would open phase two of the Conditional Facility for Increased Lending (FCIC), which covers US$16 billion of incentives for 8 months to lend to small and medium-sized enterprises (SME) and to non-banking credit providers.
Secondly, CBC said it would implement a special asset purchase program in the amount of US$16 billion over 6 months with both programs mobilizing resources of up to 10 percent of Chile’s Gross Domestic Product.
The central bank added that it would continue to explore options to intensify the monetary stimulus and support financial stability via unconventional monetary instruments if needed.
Data from Chile in April show a significant drop in economic activity in April, which the central bank should go to “new depths” in May and June due to the extension and duration of the measures to contain the Covid-19 pandemic.
Chile maintains rate but boosts un-conventional easing
June 17, 2020
