The central bank of Chile kept its benchmark interest rate unchanged at 5.0 percent, as expected, and said global financial conditions had improved but it could not rule out a resurgence of tensions in the euro zone.
Banco Central de Chile said the domestic economy was evolving around its trend rate and inflation remains below 3.0 percent. It added that inflationary expectations remain around the bank’s target of 3 percent, plus/minus one percentage point.
Chile’s annual inflation ticked up to 2.6 percent in August from July’s 2.5 percent. The central bank cut its interest rate by 25 basis points in January.
The bank said recent information confirmed slow growth in developed markets and a slowdown in emerging economies. This had lead to additional monetary stimulus, especially in the United States.
It added that commodity prices had rebounded in the last month, especially copper and fuels.
”Internationally, global financial conditions have improved and the financial tensions in the Eurozone have moderated after the announcements of the European Central Bank. However, there is still uncertainty about the region’s performance and a resurgence of tensions in coming months cannot be ruled out,” Banco de Chile said in a statement.
Last week the ECB announced a plan to buy an unlimited amount of bonds of euro zone member states as long as they agree to budgetary measures.
Chile’s economy expanded by 1.7 percent in the second quarter from the first quarter, for a 5.5 percent annual rate, up from 5.3 percent.
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