Chile’s Central Bank leaves basic rate unchanged for 8th consecutive month

The latest activity figures "make it more likely that the economy will achieve the expected traction" with favorable internal financial conditions consigned the entity.

SANTIAGO – The Board of Chile’s Central Bank has decided to keep the Monetary Policy Rate at 2.5% for the eighth consecutive month. Thus, the decision taken by the governing body in its Monetary Policy Meeting “implies maintaining the intensity of the monetary impulse,” according to the Central said in a statement.

In addition, the document stated that “the decision was taken by unanimity of its members.”

The decision of the Council “considered that the latest data are coherent with the base scenario of the December Report. At the same time, some of the risks identified there have been reduced.”

“In particular, the latest activity figures make it more likely that the economy will achieve the expected traction, while maintaining favorable domestic financial conditions,” the Chilean monetary watchdog said.

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Thus, “although in the coming months inflation will be somewhat lower than expected, mainly due to the evolution of the exchange rate, the threats to its convergence to 3% have been attenuated in the margin”.

“In this context, the Board believes that the general orientation of the monetary policy outlined in the Monetary Policy Report is still adequate. That is, a monetary impulse that will remain at a level similar to the current one, and that will only begin to withdraw once the closing of the slacks is consolidated,” the bank said.

Anyway, “the Council will continue to watch for signs of a delay in the convergence of inflation that could justify an additional monetary impulse. It also reaffirms its commitment to conduct monetary policy with flexibility, so that projected inflation is 3% over the two-year horizon, “concluded the Central.

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The minutes corresponding to this Monetary Policy Meeting will be published on Friday, February 16, 2018.