Central Bank of Chile cuts benchmark interest rate by 75 points

He Central Bank of Chile cut its referential interest rate by 75 basis points on Tuesday to bring it to 9.5%, as part of the cycle of monetary easing amid lower inflationary pressure.

The decision was unanimous.

While market operators expected a reduction in key interest to 9.5%, analysts projected a drop to 9.25%.

“The magnitude and timing of the process of reducing the dwt will take into account the evolution of the macroeconomic scenario and its implications for the trajectory of inflation”, he said in a statement.

He also highlighted that if the projections of the central scenario of the Monetary Policy Report materialize (IPoM) of September, which will present on Wednesday, in the short term the dwt it will continue along the trajectory outlined in the previous meeting.

At its July meeting, the bank said that, in the short term, the dwt would accumulate a reduction somewhat greater than that considered in his scenario.

“The Board reaffirms its commitment to act with flexibility in the event that any of the internal or external risks materialize and macroeconomic conditions so require.”added the Tuesday statement.

The post-pandemic economic recovery put strong pressure on inflation in the South American country, which led the Central Bank to aggressively increase the monetary policy rate, which, however, began to relax at the end of July with a first cut of 100 basis points. at 10.25%.

The issuing entity highlighted that, in general terms, activity and demand are evolving as expected.

The local economy advanced 1.8% year-on-year in July, a higher-than-expected figure, amid growth in services and to a lesser extent due to the production of goods.

However, it was the first year-on-year advance after five consecutive falls and the second positive record in 11 months, amid an adjustment in activity after the accelerated recovery from the impact suffered by the COVID-19 pandemic.

Source: Reuters