Chile Central Bank Sees Need for Gradual Changes to Key Rate
Chile probably will need to make changes to its benchmark interest rate as inflation hovers around 4 percent in coming months, bank board member Enrique Marshall said.
“Moderate and gradual adjustments to the monetary policy rate most likely will be required in the course of the year,” Marshall in a presentation posted on the bank website today.
The bank, which left its key rate at 5 percent for the third straight month in April, will raise the rate to 5.25 percent by October, according to traders and investors polled April 10 by the central bank. Inflation, which has breached the upper limit of the bank’s target for three of the past four months, will drop to 3.35 percent in April 2013, according to the poll.
Policy makers target 3 percent annual inflation, plus or minus 1 percentage point over a two-year horizon. While inflation dropped to 3.8 percent in March after exceeding 4 percent in December through February, consumer-price gains still pose a risk in the short term, the central banker said.
Marshall is scheduled to speak in the south-central city of Chillan today about the central bank’s quarterly economic estimates that it published on April 3. The quarterly report also forecast that inflation would remain at about 4 percent in the first half of 2012.
To contact the reporter on this story: Randall Woods in Santiago at firstname.lastname@example.org
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