Chile's central bank maintained its monetary policy rate at 3.0 percent, as expected, and was neutral in its guidance, saying future changes would depend on the "implications of domestic and external macroeconomic conditions on the inflationary outlook."
The Central Bank of Chile, which has maintained its rate since cutting it in October, omitted its guidance from December that inflation would remain above the upper bound of its tolerance range for some months but repeated that it would monitor inflation "with special attention."
Chile's headline inflation rate eased to 4.6 percent in December from 5.5 percent in November and 5.7 percent in October, a high for the year and a surprise to the central bank, which targets inflation of 3.0 percent, plus/minus one percentage point.
The central bank said the country's economy was still growing slowly, the same view it has had for a while. Chile's Gross Domestic Product expanded by only 0.4 percent in the third quarter from the second quarter for annual growth of 0.8 percent, down from 1.9 percent.
The Central Bank of Chile issued the following statement:
"In its monthly monetary policy meeting, the Board of the Central Bank of
Chile decided to keep the monetary policy interest rate at 3% (annual).
Internationally, the downward trend of the prices of commodities continued, with a
further decline in the oil price and a drop in the price of copper. External financial
conditions for the emerging economies deteriorated, while long-term rates in
developed economies declined and the dollar continued to appreciate. Meanwhile,
recent information confirms the outlook of good economic performance in the United
States and slower growth and low inflation in the Eurozone and Japan, a development
that has widened the differences in expected paths of monetary policy implemented by
Output and demand indicators continue to reveal the low growth of the Chilean
economy, in accordance with the December’s Monetary Policy Report´s baseline
scenario. Meanwhile, the unemployment rate declined and nominal wages remain
dynamic. Local financial conditions reflect the impact of the monetary stimulus. Annual
inflation dropped, while core indicators kept at the same level. Medium-term inflation
expectations remain around 3%. The evolution of prices will continue to be monitored
with special attention.
The Board reiterates its commitment to conduct monetary policy with flexibility so that
projected inflation stands at 3% over the policy horizon. Any future changes in the
monetary policy rate will depend on the implications of domestic and external
macroeconomic conditions on the inflationary outlook."