The Central Bank (BC) of Chile reduced the monetary policy rate (MPR) on Wednesday by 100 basis points and set it at 7.25%, in the fifth consecutive cut after two years of increases to contain inflation.
The Central Bank Council agreed to apply a sharp cut of 1 percentage point, considering that “inflation at the 3% target will materialize sooner than expected”.
The BC stated in a statement that the Monetary Policy Rate (MPR) “would reach a neutral level during the second part of 2024″.
At a global level, the Chilean issuing entity stated that “global inflation has continued to decline, beyond certain heterogeneities”.
When referring to the Chilean economy, he maintained that ““Local activity has evolved in line with what was anticipated” and has grown pushed by “the advancement of the generality of economic sectors”.
In July, the Central Bank of Chile began reducing the governing rate of the economy, which remained at a record 11.5%. Then, it applied a cut of 100 basis points, the largest in 14 years, after the consolidation of the process of decreasing inflation, which in 2022 reached 12.8%, the highest level in three decades.
After years of price stability, inflation became a headache for Chileans driven by the effects of massive withdrawals of money from pension funds and social aid granted in the pandemic.
Now the rise in domestic prices has moderated. In December, the Consumer Price Index (CPI) rose 0.5%, closing 2023 with an increase of 3.9%.
Source: Gestion
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