The Central Bank of Chile, which has kept rates steady this year after cutting them by 150 basis points last year to stimulate economic activity, acknowledged that total inflation in March turned out to be lower than expected but not the underlying inflation rate.
Chile's consumer price inflation rate eased to 4.2 percent in March from 4.4 percent in February while the core inflation rate only declined to 5.5 percent from February's 5.7 percent.
The central bank targets inflation of 3.0 percent within a tolerance range of 2.0 to 4.0 percent, and medium-term inflation expectations remain around 3.0 percent.
"Future changes to the MPR will depend on the implications of the internal and external macroeconomic conditions on the prospects for inflation," the bank said.
In its latest monetary policy report, the central bank raised its inflation forecast for this year to 3.6 percent from a previous estimate of 2.8 percent, and the core inflation forecast to 3.4 percent from 2.8 percent, with the depreciation of the peso the main reason for high inflation.
The central bank maintained its forecast for Chile's economic growth this year in a range of 2.5 to 3.5 percent, saying the recovery should accelerate towards the end of the year.
Chile's Gross Domestic Product expanded by 0.9 percent in the fourth quarter of 2014 from the third quarter for annual growth of 1.82 percent, up from 1.0 percent.
The central bank said today recent data are consistent with its baseline policy report, and as expected, investments are less dynamic but the unemployment rate has falling slightly although job creation is low.
The central bank also noted that prices of basic products were mixed, with prices of copper, petroleum and petroleum products rising.