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Montevideo, July 13th 2024 - 15:50 UTC

 

 

Chilean central bank leaves benchmark rate unchanged at 5.25%

Saturday, July 16th 2011 - 07:08 UTC
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Central bank President Jose De Gregorio, inflationary risks easing Central bank President Jose De Gregorio, inflationary risks easing

The Chilean central bank kept its benchmark interest rate unchanged this week for the first time since January as signs of slower growth abroad and a moderation in domestic output and demand provided space to delay additional increases.

The five-member board, led by bank President Jose De Gregorio, held the benchmark rate at 5.25%, as was anticipated by most analysts. Since the bank’s June meeting, policy makers, economists and traders have reduced estimates for future consumer prices to levels that fall within the central bank’s target range.

“In the most likely scenario, additional increases in the monetary policy rates will be necessary, the timing of which will depend on the unfolding of domestic and external macroeconomic conditions,” the bank said in a statement accompanying its decision.

Inflation slowed to 0.2% in June from 0.4% in May on a decline in clothing and transportation prices, the National Statistics Institute said in a July 8 report. Core inflation, which excludes produce and fuel, decelerated to 0.1% from 0.3% in May.

Annual inflation will be 3.4% in 12 months, matching levels seen in June, according to the survey. Policy makers in a June forecast and economists in a July 12 bank survey lowered their forecasts for annual inflation in December to 4%, which is the upper limit of policy makers’ target range.

“The main news in recent months has been the easing of some inflationary risks,” De Gregorio told senators June 20, when he published new price forecasts. “International prices for commodities didn’t continue growing and the propagation of specific price shocks has been limited.”

Economic activity probably will slow on higher lending costs, De Gregorio told the lawmakers.

The economy, which grew 9.8% in the first quarter, is on track to expand 6% to 7% this year, according to bank forecasts.

“Domestically, output, demand and labour market figures are progressing with strength, showing signs of moderation,” the bank said this week.
 

Categories: Economy, Latin America.

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