Chilean industrial output grew more than expected in July as output capacity recovers from the February earthquake, cementing expectations the central bank will stick to its strategy of rate increases in September.
Chile’s central bank will probably raise its benchmark interest rate for a fourth straight month after policy makers last week forecast that the economy will expand at the fastest pace in five years in 2010.
Chile’s economy grew a faster-than- forecast 5.7 percent in September from a year earlier, damping speculation of a cut in interest rates as the European debt crisis has a limited impact on domestic demand.
Chilean interest-rate swap rates rose as traders raised bets on central bank rate increases after factories produced more than expected in April and spending boomed before the World Cup soccer tournament.
Chile’s central bank probably will slow the pace of interest-rate increases today as the currency’s rally and a lower-than-estimated rise in consumer prices last month help keep inflation expectations in check.
Chile’s central bank raised its benchmark interest rate for the tenth time in 11 months in a bid to anchor inflation expectations and give policy makers leeway to slow the pace of rate increases in the months ahead.