Friday, September 16, 2011

Central Bank of Chile Holds Policy Rate at 5.25%

The Banco Central de Chile maintained its monetary policy interest rate unchanged at 5.25%.  The Bank noted the impact of slowing developed market growth  and volatility, and on its own economy said: "Domestically, output and demand figures show signs of moderation, in line with projections in the Monetary Policy Report. Labor market conditions are still tight and faster growth in nominal wages is observed. CPI inflation indicators have hovered around 3% y‐o‐y, while core inflation measures remain contained. Inflation expectations are close to the target."

Chile's central bank previously also held the monetary policy interest rate unchanged at 5.25% at its August meeting.  The Bank last raised its monetary policy interest rate by 25 basis points to 5.25% at its June meeting this year.  Chile reported annual consumer price inflation of 2.9% in July, compared to 3.4% in June, 3.3% in May 2011, and 3.2% in April this year; within the Bank's inflation target of 2-4%.  The Chilean economy grew 8.4% in the first half of 2011, driven by strong domestic demand; full year GDP growth is expected around 6.5%, while inflation is seen around 4% by the end of the year.


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