Central Bank of Chile decided yesterday to raise the main national lending rate from 6.00% to 6.25% in order to reduce the threat level of the rising inflation, which has now reached its highest level in almost ten years.
The benchmark lending rate is now at its highest value since 2002. The average forecast among the economy analysts for this meeting has been also hawkish, so the rate change wasn’t unexpected at all.
This was the fifth rate increase since the central bank saw the real danger of inflation in the middle of 2007. December consumer price inflation was reported at the annual rate of 7.8% after the food and transportation prices grew fast through the whole year. Chile’s central bank was required to act to tame this growth.
With the 3% (±1%) target inflation rate Chilean monetary authorities will be closely monitoring the incoming data on the early January CPI to decide the next rate change. If required central bank may even sacrifice some of the economic growth in order to the target inflation rate in next two years.
If you have any questions, comments or opinions regarding the Chilean Peso,
feel free to post them using the commentary form below.
