Thursday, December 13, 2012

Chile holds rate steady, Q3 economy better than forecast

     The Central Bank of Chile kept its policy rate steady at 5.0 percent, as widely expected, saying domestic output and demand expanded above forecasts in the third quarter but inflation expectations are in line with the bank's target.
    Banco Central de Chile, which has held rates steady since a 25 basis point cut in January, said global financial conditions were better than a month ago, but risks from the euro zone's fiscal and financial situation are still high and the risk of a sharp fiscal adjustment in the United States is still present.
    Economic growth remains weak in developed economies while more positive signs have been seen in some emerging economies, the bank said in a statement.
    Chile's Gross Domestic Product expanded by 1.4 percent in the third quarter from the second for an annual rise of 5.7 percent, up from a second quarter rate of 5.5 percent.
    The inflation rate fell by a larger-than-expected 0.5 percentage points in November to an annual rate of 2.1 percent, down from October's 2.9 percent, but the bank said the fall was due to one-time factors.
    Chile's central bank targets annual inflation of 3.0 percent and reiterated its commitment to conduct monetary policy "with flexibility" so it achieves this target.


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