MercoPress. South Atlantic News Agency

Chilean Central Bank leaves rate unchanged at 5%

Chile's Central Bank left interest rates unchanged at 5% this month in the hope of slowing inflation. The action was widely foreseen by experts in the marketplace.

"Without a doubt, this is being done in an attempt to control inflation," said Joseph Ramos, head of the Economics and Business department at the Universidad de Chile.

Inflation has been cited as a problem hindering the success of Chilean exporters.

Felipe Morandé, an academic at the Universidad de Chile, agreed with the Bank's decision. He claimed that there are appropriate times to keep the interest rate steady and this is one such time. By his estimate the interest rate should climb to 5.75% by the end of the year, approaching the natural level that should be a little over 6%.

The general manager of the Euroamerica brokerage firm, Francisco Montaner, questioned whether this decision was taken with the market in mind and if the 5% rise in the Federal Reserve contributed as well.

Alejandro Alarcón, general manager of the Chilean Banks Association, thinks the present national interest should be between 5.25 and 5.5% but it will depend on how internal demand keeps up.

The Central Bank pointed to the favourable conditions in the international copper market and noted that first quarter activity was less than expected. It also warned that rates in the coming months would probably go up.

By Benjamin Peim The Santiago Times - News about Chile