Chile Holds Key Rate at 3.5%


The Central Bank of Chile left its benchmark monetary policy interest rate unchanged at 3.5 percent on November 16th, 2016, as widely expected. Policymakers said in October, the monthly CPI variation was again unexpectedly low, driving annual inflation to 2.8 percent. At short terms, inflation expectations have dropped, but are near the target of 3 percent at the end of the projection horizon.

Statement by the Central Bank of Chile:

Internationally, the volatility of financial markets increased after the US elections. It is
worth noting the appreciation of the dollar and especially the rise in long-term rates.
Financial conditions facing emerging economies worsened, but remain better than they
were early in the year. Commodity prices have posted mixed movements. The prices of
metals—especially copper—increased, while those for oil and derivatives fell. Activity
indicators and prospects show no important change, but the potential effects of recent
events have yet to become apparent.

In October, the monthly CPI variation was again unexpectedly low, driving annual
inflation to 2.8%. At short terms, inflation expectations have dropped, but are near the
target at the end of the projection horizon. In the third quarter, domestic output and
demand behaved in line with forecasts in the September Monetary Policy Report.
Accordingly, the labor market continues to adjust gradually. Long-term interest rates
have increased.

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.

Chile Holds Key Rate at 3.5%


Central Bank of Chile | Yekaterina Guchshina | yekaterina@tradingeconomics.com
11/18/2016 10:26:09 AM