Chile's central bank maintained its monetary policy rate at 3.0 percent, saying inflation in January was "unexpectedly high," especially the core measure, and is likely to remain above its tolerance range for some months.
The Central Bank of Chile, which cut its rate by 150 basis points in 2014 to counter waning economic growth, added that it would monitor the evolution of inflation "with special attention."
Chile's consumer price inflation rate eased to 4.5 percent in January from 4.6 percent in December while the core inflation rate rose to 5.5 percent from 5.1 percent.
The central bank, which targets inflation of 3.0 percent, plus/minus one percentage point, added that output and demand suggests economic growth will be in line with its December forecast.
Chile's Gross Domestic Product expanded by 0.4 percent in the third quarter of last year for annual growth of 0.8 percent, down from a rate of 1.9 percent in the second quarter.
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 main news was the announcement of a quantitative easing
program in the Eurozone and increased monetary stimulus in several developed
economies. With a few exceptions, the prices of commodities rose. Copper is trading at
a price similar to that of last month. Global financial conditions for emerging
economies posted no noticeable change. The dollar strengthened further.
January’s inflation was unexpectedly high, primarily the core measure. In the most
likely scenario, annual inflation is expected to remain for some months above the
upper bound of the tolerance range, and its evolution will be monitored with special
attention. Medium-term inflation expectations have remained around 3%. Output and
demand indicators suggest that growth rates will be in line with those included in the
December Monetary Policy Report.
Meanwhile, the unemployment rate dropped and
nominal wages remained dynamic. Domestic financial conditions reflect the impact of
the monetary stimulus.
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."