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Montevideo, February 25th 2024 - 09:42 UTC

 

 

Chile ups TPM to curb inflation

Thursday, October 13th 2022 - 10:18 UTC
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Chile's Central Bank Wednesday announced an increase of 50 basis points to the Monetary Policy Rate (TPM) which has been now set at 11.25% in a unanimous decision by the Board aimed at tackling inflation.

Wednesday's decision on the grounds that “global growth prospects and international financial conditions have deteriorated” came despite statements last month that the maximum possible level had reached (10.75%).

At that time, the Central Bank argued that “the next rate movements will depend on the evolution of the macroeconomic scenario and its implications for the convergence of inflation to the target.”

The Central Bank also warned that “the risks to the macroeconomic scenario are elevated and their short and medium-term implications should be carefully assessed.”

Therefore: “The Board will remain attentive to the development of these events and reaffirms its commitment to conduct monetary policy with flexibility so that projected inflation will be at 3% over the policy horizon.”

Chilean market analysts forecast inflation will be at 12.6 % at the end of the year, slightly higher than the previous month's forecast (12.5 %), according to the Economic Expectations Survey released Wednesday by the Central Bank.

Inflation stood at 13.7 % annualized last September, far from the 3 % target range, boosted by the increase in food prices. The Central Bank considered for its decision the persistent global inflation and the increase in reference rates by central banks, as well as the expectations that herald a prolonged monetary tightening in developed economies.

At the local level, the Central Bank pointed out that the financial market has followed the recent global trend, with a slowdown in bank credit due to a more restrictive supply and a weakened demand, mainly in commerce, industry, and construction.

Categories: Economy, Politics, Chile.

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