The Central Bank of Chile will be releasing its statement with the target interest rate. The current interest rate is maintained at 5.75% after three rate hikes by 0.25% going in a row from July to September 2007. Majority of the analysts surveyed about the forthcoming rate decision agree that the Chilean interest rate will remain at the same level.
Chilean government set itself to maintain the high interest rates policy back in 2002 in order to slow down the inflation growth. As the high interest rates helped to fight the inflation, the economical growth showed some suffering from the lack of liquidity. So, increasing the rate in the current conditions may not be a perfect choice to fight the high domestic prices.
Economists imply that current acceleration of the inflation growth, which reached 7.4% annual rate this October, may be caused not by the internal policies in Chile, but by the international affairs, like record breaking oil price rallies and global financial crisis. Fighting something that is not affected by the Chilean monetary policy with the interest rate hikes can not be justified when GDP growth is slowing down.
Central Bank of Chile stopped increasing the rate after September meeting and there is a high probability that the rest from hikes will last for two more months before the clearer picture of the economic situation will be available.
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