Friday September 15 2017
Chile Key Rate Kept On Hold for 4th Straight Meeting
Mario | mario@tradingeconomics.com

Chile’s central bank kept the benchmark interest rate unchanged at 2.50 percent in September 14th of 2017, leaving the rate unchanged for the fourth straight meeting. The outcome matched consensus expectations, and leaves the interest rate standing at its lowest level since September of 2010. Policymakers underscored that economic conditions improved since the last meeting, with copper prices climbing over the last months despite a recent downturn. Members of the board did not adopt an explicit bias on this occasion. Chile's consumer prices increased 1.9 percent year-on-year in August of 2017, above 1.7 percent in the previous month. It was the highest inflation rate since May.

Statement by the Central Bank of Chile:

On the external front, the financial markets were somewhat more volatile, in a context where global financial conditions remain favorable and the US dollar has weakened. World activity prospects are still positive; commodity prices rose in the last month, including copper, even considering its recent drop.

On the domestic front, August’s inflation was in line with forecasts in the last Monetary Policy Report, at 1.9% annually. Inflation expectations at shorter terms have fallen, reflecting the effects of the peso appreciation, but remain around 3% two years out. Regarding activity, the improved performance of consumption-related sectors continues to stand out, outperforming those related with investment. The behavior of private consumption reflects the labor market situation and not-so-pessimistic expectations.

Incoming data since the publication of the September Report are consistent with the baseline scenario and the monetary impulse described therein, i.e., the policy rate staying close to its current levels and beginning to rise to neutral only once the economy starts closing the activity gap. The risk balance has not changed either. In particular, the risk balance for medium-term inflation and activity are estimated to be unbiased, but with a downward bias for short-term inflation. As always, the Board will continue to monitor any deviations of the baseline scenario that may hinder the convergence of inflation to 3% over a two-year horizon and warrant moving the monetary policy interest rate.




Friday August 18 2017
Chile GDP Advances 0.9% YoY in Q2
Banco Central de Chile | Joana Taborda | joana.taborda@tradingeconomics.com

The economy of Chile expanded 0.9 percent year-on-year in the second quarter of 2017, following a meager 0.1 percent expansion in the previous period which was the lowest since the 2009 recession. Figures came in line with market expectations as a stronger household spending was able to offset falls in investment and exports.

Year-on-year, household spending increased 2.6 percent, following a 1.8 percent rise in Q1. On the other hand, public expenditure rose less (2.7 percent compared to 4.9 percent in Q1). Gross fixed capital investment shrank 4.1 percent, following a 2.4 percent drop in Q1 and marking the fourth straight quarter of decreases. Construction investment went down 6.5 percent (-6.2 percent in Q1) and investment in machiney and equipment rose a meager 0.1 percent (4.3 percent in Q1). Exports went down 3.5 percent (-4.2 percrnt in Q1), mainly due to lower sales of mining and industrial goods and imports rose at a faster 7 percent (4.6 percent in Q1).

On the production side, higher growth rates were recorded for real estate (2.4 percent compared to 1.8 percent in Q1); communication (3.5 percent compared to 2.4 percent); transport (0.8 percent compared to 0.7 percent) and restaurants and hotels (0.7 percent compared to 0.6 percent in Q1). In addition, the output for utilities rebounded (0.6 percent compared to -0.2 percent). On the other hand, slower growth rates were seen for personal services (2.8 percent compared to 3.7 percent) and internal trade (3.4 percent compared to 5.8 percent). The manufacturing sector stalled, following a 1 percent rise in Q1. Lower production of wine, beer, tobacco, canned fruit and non-metallic minerals offset a rise in fishing, cellulose and metal products. The mining sector shrank 3 percent, following a 13.8 percent slump in the previous period. Copper production went down 2.3 percent (-14.3 percent in Q1) amid a slow recovery in the Escondida mine after the stoppage in the previous quarter. In addition, maintenance and unfavourable weather conditions also weighed down on the the sector's performance. Construction slumped 3.7 percent (-1.7 percent in Q1).

On a quarterly basis, the economy expanded 0.7 percent, following a downwardlt revised 0.1 percent rise in Q1.




Thursday August 17 2017
Chile Leaves Interest Rate Unchanged At 2.50%
Mario | mario@tradingeconomics.com

Chile’s central bank kept the benchmark interest rate unchanged at 2.50 percent in its August 17th, 2017 meeting following no change in its July and June meetings. The outcome matched consensus expectations, and leaves the interest rate standing at its lowest level since September of 2010. Policymakers underscored that economic conditions improved since the last meeting, with the peso appreciating the copper prices heading north. Members of the board did not adopt an explicit bias on this occasion. Chile's consumer prices increased 1.7 percent year-on-year in July of 2017, the same pace as in the previous month.

Statement by the Central Bank of Chile:

Incoming international news continue to point to a favorable scenario. The world activity outlook has strengthened and global financial conditions remain expansionary.  In general, commodity prices have increased, most notably in the case of copper.

On the domestic front, July’s inflation was 0.2%, thus in annual terms it remained at 1.7%, below the last Monetary Policy Report’s estimate. Inflation expectations brought no relevant news. During the second quarter activity posted weak growth, attributable to the performance of some investment-related sectors and some specific factors. Private consumption remains stable, in line with conditions in the labor market and expectations that have become less pessimistic. The peso has appreciated.

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.


Thursday July 13 2017
Chile Holds Key Rate At 2.5% For 2nd Meeting
Mario | mario@tradingeconomics.com

Chile’s central bank kept the benchmark interest rate unchanged at 2.50 percent in its July 13th, 2017 meeting following no change in its June meeting and a 25 bps cut in May. The outcome matched consensus expectations, and leaves the interest rate standing at its lowest level since September of 2010. Policymakers reiterated that inflation stood at 1.7 percent year-on-year in June, easing from 2.6 percent in May. Members of the board did not adopt an explicit bias on this occasion.

Chile's consumer prices increased 1.7 percent year-on-year in June of 2017, easing from a 2.6 percent rise in the previous month. It was the lowest inflation rate since October of 2013. Annual core inflation advanced 2 percent, following a 2.5 percent rise in the previous month. On a monthly basis, consumer prices went down 0.4 percent compared to a 0.1 percent gain in May. The central bank predicts year-end inflation of 2.7 percent in 2017.

In its March quarterly inflation report, the central bank lowered GDP estimates, while leaving unchanged inflation forecasts. The central bank dropped its bias on this occasion, recognizing that copper prices have improved but construction and mining activity remain weak.

Statement from the Central Bank of Chile:

Internationally, long-term interest rates increased, but financial conditions remain favorable. In general, news was consistent with the scenario of gradual recovery in global activity. The copper price rose, while the oil price, beyond fluctuations, trades near its levels of last month.

On the domestic front, most noteworthy was June’s monthly inflation at –0.4%, heavily influenced by the behavior of prices of fresh fruits and vegetables and some other products, which resulted in y-o-y inflation standing at 1.7%. Inflation expectations at shorter terms have dropped, but at the end of the projection horizon are near the target. Partial second-quarter figures for activity and demand are consistent with forecasts, and reflect the negative impact of mining and construction. Private consumption growth remains stable, in line with the performance of the labor market.

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.


Thursday June 15 2017
Chile Keeps Interest Rate At 2.5% And Drops Bias
Mario | mario@tradingeconomics.com

Chile’s central bank kept the benchmark interest rate unchanged at 2.50 percent in its June 15th, 2017 meeting following a 25 bps cut in its May 18th meeting. The outcome matched consensus expectations, and leaves the interest standing at its lowest level since September of 2010. Policymakers reiterated that mining and construction activity remains soft, and that inflation (currently at 2.6 percent year-on-year) is expected to remain on target. Members of the board did not mention this time around if the room for further easing remains open.

Chile's consumer prices increased 2.6 percent year-on-year in May of 2017, easing from a 2.7 percent rise in the previous month. It is the lowest inflation rate since November 2013, as cost slowed significantly for food and non-alcoholic beverages (2.6 percent vs 4.2 percent in April). Annual core inflation rose by 2.2 percent, at the same pace as Annual core inflation advanced 2.5 percent, after standing at 2.2 percent for the months (the lowest since November of 2013). The central bank predicts year-end inflation of 2.7 percent in 2017.

In its March quarterly inflation report, the central bank lowered GDP estimates, while leaving unchanged inflation forecasts, suggesting that a more accommodative monetary stance may be expected this year. However, the central bank dropped its bias on this occasion.

Statement by the Central Bank of Chile:

Internationally, indicators continue to show favorable financial conditions and a scenario of gradual economic recovery in the main developed countries, as described in the latest Monetary Policy Report. Commodity prices show mixed fluctuations, where the drop in the prices of oil and derivatives stands out.

On the domestic front, annual inflation stood at 2.6% and inflation expectations at the end of the projection horizon remain near the target. Partial second-quarter figures for activity and demand are consistent with forecasts, and reflect the negative impact of mining and construction. Private consumption remains stable, in line with the performance of the labor market.

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.


Thursday May 18 2017
Chile Unexpectedly Cuts Key Rate To 2.5%
Mario | mario@tradingeconomics.com

Chile’s central bank lowered the benchmark interest rate by 25 bps to 2.50 percent in its May 18th, 2017 meeting following a 25 bps cut in its April 13th meeting. Market participants were expecting no change. The move leaves the interest standing at its lowest level since September of 2010. Policymakers mentioned that mining and construction activity contracted in the first quarter while inflation is expected to remain on target. Members of the board also underscored that further easing will depend on mid-term inflation expectations.

Inflation in Chile increased 2.7 percent year-on-year in April of 2017, at the same pace as in the previous two months and within the central bank’s target of 2.0-4.0 percent. Annual core inflation rose by 2.2 percent, at the same pace as in March and at the lowest since November of 2013. The central bank predicts year-end inflation of 2.7 percent in 2017.

While the rate cut surprised market expectations for the second straight meeting, in its March quarterly inflation report, the central bank lowered GDP estimates, while leaving unchanged inflation forecasts, suggesting that a more accommodative monetary stance may be expected this year, as confirmed by today’s monetary policy rate announcement. 

Statement by the Central Bank of Chile:

Internationally, despite a recent increase in volatility, financial conditions have remained favorable and incoming figures continue to lend support to a scenario of stronger growth in the developed world. Commodity prices again showed mixed fluctuations, with a drop in the copper price. Overall, important risks persist.

On the domestic front, annual inflation remained at 2.7% and expectations at the end of the projection horizon are near the target. The activity and demand outlook depicted in the first-quarter National Accounts were in line with the March Monetary Policy Report, showing the negative impact of mining and construction. Private consumption is stable, reflecting the performance of the labor market.

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.



Thursday May 18 2017
Chile Annual GDP Growth Lowest Since 2009 In Q1
Banco Central de Chile | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The Chilean economy advanced 0.1 percent year-on-year in the first quarter of 2017, easing from a 0.5 percent expansion in the previous period and slightly below market expectations of 0.2 percent. It is the lowest growth rate since the 2009 recession as private consumption slowed and exports shrank further after a six-week strike at the world's biggest copper mine caused a 14.4 percent slump in copper production.

Year-on-year, household expenditure increased at a slightly slower pace (2 percent vs 2.4 percent in Q4) and external trade contributed negatively to growth as exports continued to decrease (-4.9 percent vs -2 percent in Q4) while imports surged (4.2 percent from a flat reading in Q4). On the positive side, government spending rose faster (5.1 percent vs 1.7 percent in Q4) and fixed investment contracted less (-2.4 percent vs - 5 percent in Q4). 

On the production side, growth eased for transport (0.4 percent vs 2 percent in Q4); financial services (2.5 percent vs 2.9 percent in Q4); real estate activities (1.8 percent vs 2.1 percent in Q4) and public administration (1.5 percent vs 2.5 percent in Q4). Business services decreased (-3.6 percent vs -3.5 percent in Q4) and mining sector fell sharply (-13.8 percent vs -3.3 percent in Q4), dragged down by reduced copper production (-14.4 percent vs -3 percent in Q4) hit by the prolonged strike at the world's largest copper mine Escondida. Construction slipped (-2.2 percent vs -0.2 percent in Q4) and utilities declined (-0.5 percent vs -7.6 percent in Q4).In contrast, output advanced for internal trade (5.5 percent vs 3 percent in Q4); communication (2.7 percent vs 1.7 percent in Q4) and personal services (4.3 percent vs 3 percent). Also, manufacturing rebounded (0.9 percent vs -2.2 percent in Q4), boosted by food (4 percent vs -1.7 percent in Q4), textiles ,clothing and footwear (13 percent vs 10.3 percent in Q4) and metal products, machinery and equipment (6.4 percent vs 1.9 percent). In addition, fisheries rose significantly (34 percent vs 1.6 percent in Q4).

On a quarterly basis, the GDP increased 0.2 percent compared to a downwardly revised 0.3 percent drop in the previous three months.


Thursday April 13 2017
Chile Unexpectedly Cuts Interest Rate To 2.75%
Mario | mario@tradingeconomics.com

Chile’s central bank cut the benchmark interest rate by 25 bps to 2.75 percent in its April 13th, 2017 meeting. Market participants were expecting no change. The move leaves the interest standing at its lowest level since October of 2010. In the central bank’s policy statement, the policymakers mentioned that economic activity remains subdued and that inflation is expected to remain on target. Members of the board also underscored that further easing will depend on mid-term inflation expectations.

Inflation came at 2.7 percent in March, at the same pace as February and within the central bank’s target of 2.0-4.0 percent. Core inflation eased to 2.2 percent, the lowest since November of 2013. The central bank predicts year-end inflation of 2.7 percent in 2017.

In its March quarterly inflation report, the central bank lowered GDP estimates, while leaving unchanged inflation forecasts, suggesting that a more accommodative monetary stance may be expected this year.  

Statement by the Central Bank of Chile:

Internationally, global financial conditions remain favorable and various indicators point to a scenario of stronger growth and higher inflation in the developed world. Commodity prices showed mixed fluctuations, where the higher oil price stood out. Overall, important risks persist.

On the domestic front, inflation and activity performed in line with forecasts in the March Monetary Policy Report. Annual inflation remained at 2.7% and expectations at the end of the projection horizon are near the target. Indicators on economic activity and domestic demand remain weak. In particular, the labor market has deteriorated somewhat more than foreseen.

To ensure the convergence of inflation to the policy target, the Board will assess the need for some additional increase in the monetary impulse, which will hinge on the medium-term inflation outlook. As always, it reiterates its commitment to conduct monetary policy with flexibility, so that projected inflation stands at 3% over the policy horizon.


Monday March 20 2017
Chile Annual GDP Growth Slows To 0.5% In Q4
Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The Chilean economy advanced 0.5 percent year-on-year in the last quarter of 2016, slowing from an upwardly revised 1.8 percent expansion in the previous period. It is the lowest growth rate since the 2009 recession as public spending slowed sharply and investment and exports slumped. Considering 2016, the Chilean economy expanded 1.6 percent, lower than a 2.3 percent growth in 2015.

Year-on-year, government spending eased sharply (1.7 percent vs 7.1 percent in Q3), fixed investment contracted further (-5 percent vs -2.4 percent) and external trade contributed negatively to growth as exports declined 2 percent (from 0.1 percent in Q3) and imports were flat (from -2 percent in Q3). On the positive note, household expenditure grew slightly more (2.4 percent vs 2.3 percent in Q3).

On the production side, growth eased for internal trade (3 percent from 3.4 percent in Q3); transport (2 percent from 4.2 percent in Q3); communications (1.7 percent from 2.6 percent in Q3) and personal services (3 percent from 6.1 percent in Q3).Business services declined 3.5 percent (from -2.1 percent in Q3); mining fell 3.3 percent (from -0.8 percent in Q3) driven by lower production of copper (- 3 percent) and manufacturing decreased 2.2 percent (from -0.8 percent in Q3), dragged down by beverages and tobacco (-2.2 percent), chemicals (-4.4 percent) and non-metallic minerals and metals (-8.5 percent). Also, construction edged down 0.2 percent (from 2.2 percent in Q3) and utilities fell sharply (-7.6 percent from -2.8 percent in Q3). In contrast, output rose faster for financial services (2.9 percent from 2.7 percent in Q3); agriculture (8.3 percent from 2 percent in Q3) and fishing (1.6 percent from 0.8 percent in Q3).

On a quarterly basis, the economy contracted 0.4 percent compared to an upwardly revised 0.9 percent expansion in the previous three months.

Considering full 2016, mining production shrank 2.9 percent (after being flat in 2015), mainly due to  copper (-2.7 percent compared to 0.1 percent). Contractions were also recorded in manufacturing (-0.9 percent from 0.2 percent in 2015) and business services (-1.8 percent compared to 1.2 percent). In addition, production slowed in agriculture (4.5 percent compared to 9.8 percent), mainly due to wine; construction (2.5 percent compared to 3.9 percent); financial services (3.7 percent compared to 5.4 percent); transport (3.3 percent compared to 3.7 percent) and restaurants and hotels (0 percent compared to 2.9 percent). In contrast, activities rose faster in internal trade (3.4 percent compared to 2.3 percent), personal services (5.2 percent compared to 1.8 percent) and real estate (2.7 percent compared to 2.2 percent). 


Thursday March 16 2017
Chile Cuts Interest Rate To 3.0%
Mario | mario@tradingeconomics.com

The Chilean Central Bank cut the key rate to 3.0 percent on March 16th of 2017 after leaving the Monetary Policy Rate (MPR) unchanged in February in an attempt to boost growth amid a slowdown in inflation. The decision matched expectations. In the press release, the central bank stressed that inflation remains within target and that economic activity remains sluggish. Policymakers underscored that further easing could be seen if current macroeconomic and inflationary trends persist.

Inflation came at 2.7 percent in February, marginally down from January’s 2.8 percent and within the central bank’s target of 2.0-4.0 percent. Core inflation dropped from 2.7 percent in January to 2.3 percent in February, the lowest figure since December 2013. The Central Bank predicts year-end inflation of 2.7% in 2017.

The latest economic survey by the Chilean Central Bank showed that although analysts kept unchanged their 2018 GDP estimate, recent data led them to lower their growth expectations for this year. Industrial production returned to the red in January, falling 0.9 percent year-on-year after growing 1.4 percent in the previous month. Mining dropped 1.9 percent and manufacturing fell 1.1 percent.  

Statement by the Central Bank of Chile:

Internationally, global financial conditions have remained favorable. In the developed world, inicators continue to point to a scenario of stronger growth and higher inflation. In this context, expectations of a monetary policy normalization have strenghtened, especially in the US. Commodity prices decreased, most notably oil. Overall, imporant risks persist.

On the domestic front, annual inflation was 2.7%, in line with forecasts in December's Monetary Policy Report. Inflation expectations at the end of the projecdtion horizon are near the target, although for the coming months they are in the lower part of the tolerance range. Activity and demand indicators remain weak. In the labor market, salaried employment deteriorated further, although the unemployment rate remained stable.

The Board estimates that, if the recent trends of the economic scenario persist, and so their implications on the medium-term inflation outlook, it could be necessary to increase the monetary impulse. At the same time, it reiterates its commitment to conduct monetary policy with flexibility, so that projected inflation stands at 3% over the policy horizon.