The international and domestic “context of instability has led the central bank to be a little more cautious for now about rates.”
Analysts surveyed by the central bank this week said inflation, currently at 4 percent, would return to the 3 percent goal within two years. Core inflation, which excludes food and energy costs, was 4.8 percent in October.
With inflation expectations anchored at the target, the central bank has vowed to retain monetary stimulus amid economic weakness, saying the key key rate won’t reach the neutral level of 4.5 percent to 5 percent any time soon.
“The future trajectory of the key rate envisages additional adjustments to ensure the convergence of inflation to the target,” the central bank said in a statement accompanying today’s decision. “The rhythm will depend on new information and its implications for inflation.”
There are tentative signs of an economic pick-up. Economic activity rose at the fastest pace in two years in September, fueled by an unexpected rise in manufacturing that helped lift industrial production for the third time this year. The Imacec index, a proxy for gross domestic product, rose 1.1 percent from the prior month, when it contracted 1 percent, the central bank said last week.
Chile’s rebound from the slowest growth in five years in 2014 has taken longer than forecast as investment stagnates and consumer spending remains weak.
The international and domestic “context of instability has led the central bank to be a little more cautious for now about rates.”Analysts surveyed by the central bank this week said inflation, currently at 4 percent, would return to the 3 percent goal within two years. Core inflation, which excludes food and energy costs, was 4.8 percent in October.With inflation expectations anchored at the target, the central bank has vowed to retain monetary stimulus amid economic weakness, saying the key key rate won’t reach the neutral level of 4.5 percent to 5 percent any time soon.“The future trajectory of the key rate envisages additional adjustments to ensure the convergence of inflation to the target,” the central bank said in a statement accompanying today’s decision. “The rhythm will depend on new information and its implications for inflation.”There are tentative signs of an economic pick-up. Economic activity rose at the fastest pace in two years in September, fueled by an unexpected rise in manufacturing that helped lift industrial production for the third time this year. The Imacec index, a proxy for gross domestic product, rose 1.1 percent from the prior month, when it contracted 1 percent, the central bank said last week.Chile’s rebound from the slowest growth in five years in 2014 has taken longer than forecast as investment stagnates and consumer spending remains weak.
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