The Central Bank of Chile announced this Wednesday, October 13, the increase in its benchmark interest rate from 1.50% to 2.75%, the biggest rise in 20 years, in a context of inflationary pressures.
The issuing entity made the decision to raise the so-called monetary policy rate (MPR) unanimously by the members of its Board, when not a week has passed since the data of the Consumer price index (IPC) of September, which rose to 1.2%, its highest record since 2008 and the year-on-year reached 5.3%.
“The evolution of the macroeconomic scenario has increased the risks for the convergence of inflation to the target of 3%,” the entity explained in a statement.
The price increase has been transversal in different items of the family basket such as transport (2.7%), food (2.1%) and clothing and footwear (1.8%), while the price of gasoline reached record levels after adding 35 consecutive weeks on the rise. In addition, the Chilean peso has had “a significant depreciation” against the dollar, which has hit Chileans’ pockets hard, points out the BC.
According to experts, inflation is explained by higher liquidity after three early withdrawals of 10% of the pensions that Congress approved since September 2020 to alleviate the crisis caused by the COVID-19 pandemic. Also for the recovery of employment and aid in money from the government to families for the health emergency.
The Chilean economy contracted by 5.8% in 2020 – the worst drop in four decades – and almost 2 million jobs were lost due to the pandemic, but the Central Bank estimates GDP growth for this year of between 10, 5% and 11.5%.
With information from EFE and AFP.
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