Chile’s central bank board cut its benchmark interest rate for a third time in five months today after inflation eased amid the slowest economic growth in four years.
Chile’s central bank board probably will cut its key interest rate for the third time since October to stimulate the economy, bucking a tightening trend in emerging markets from India to Brazil.
Chilean consumer prices rose 0.2 percent in January, leaving annual inflation in the lower half of the target range, even after the peso depreciated for three months.
Chile’s central bank President Rodrigo Vergara said slower than expected economic growth and a lack of inflationary pressures are paving the way for further interest rate cuts.
Chile’s peso plunged to the weakest level in three years as copper fell and investors fled emerging- market currencies.
Chile’s central bank signaled it may resume interest rate cuts as the economy grows at the slowest pace in more than two years, after keeping borrowing costs on hold yesterday.
Currency intervention should be a last resort, Chilean central bank policy maker Rodrigo Vergara wrote in an article posted today on the bank’s website.
Chile’s central bank kept borrowing costs unchanged yesterday after inflation accelerated more than expected in November, climbing back to the target range for the third time in the past 12 months.
Chile’s central bank cut its key interest rate by a quarter point for the second straight month after domestic demand weakened and the inflation rate fell below the bottom of the target range.
Chilean swap rates rose the most in five months after central bank president Rodrigo Vergara said two consecutive reductions in borrowing costs don’t necessarily mean policy makers will cut again in December.
"Recent economic data show some signs of deceleration."
- Rodrigo Vergara on May 16, 2013