Chilean Policy Makers Were Unanimous on March Rate Decision

Chilean policy makers were unanimous in their decision to keep the benchmark interest rate unchanged this month, saying inflation may fall into the target range later than previously thought, minutes of the meeting showed.

All 17 economists surveyed by Bloomberg had expected the bank to keep its key rate at 5 percent on March 15 for a second straight month. Policy makers didn’t discuss raising rates, with one saying there was no evidence of a sustained demand slowdown, according to the minutes published on the bank’s website today.

“All the board members expressed their concern about the inflation outlook and highlighted the rebound in various measures of underlying inflation,” policy makers said. “They also highlighted increases in short-term inflation expectations. However, they also agreed that the risks from the external scenario remained significant.”

The third-highest borrowing costs among major Latin American rate-setting countries hasn’t curbed inflation or economic growth in the top copper-producing nation. Policy makers are unlikely to repeat January’s rate cut anytime soon as copper prices rally and the labor market operates close to full employment, economist Alberto Ramos wrote yesterday.

Inflationary Pressures

“If the recent dissemination of inflationary pressures does not abate soon, the central bank may be pushed to adopt a hawkish bias,” Ramos, a Latin America economist at Goldman Sachs Group Inc., wrote in a note e-mailed to investors yesterday. “A number of demand and supply side indicators show the economy performed at a very strong level in February.”

Retail sales surged a faster-than-forecast 12.4 percent in February from last year as industrial production, which includes mining, manufacturing and utilities, expanded 6.4 percent after contracting in January, the National Statistics Institute said yesterday.

Monthly inflation, which exceeded estimates at 0.4 percent in February, will accelerate to 0.5 percent in March, the highest level since December, according to the median estimate of 58 traders and investors polled March 27 by the central bank.

The peso strengthened 0.5 percent to 487.1 per U.S. dollar at 8:46 a.m. Santiago time from 489.83 yesterday.

To contact the reporters on this story: Randall Woods in Santiago at; Sebastian Boyd in Santiago at

To contact the editor responsible for this story: Joshua Goodman at

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