Chile’s Jobless Rate Unexpectedly Fell to 6.6% Through June

Chile´s unemployment rate fell to 6.6 percent in the three months through June after economists forecast an increase, the National Statistics Institute said in a report today.

The median estimate of 15 economists surveyed by Bloomberg was for the jobless rate to rise to 6.8 percent from 6.7 percent in the three months through May. Unemployment was 7.2 percent in the three months through June last year.

Policy makers have refrained from following Brazil’s lead on monetary easing as they wait to see if the global slowdown will cause jobs growth and inflation in Chile to ease. The labor market remains tight and poses a risk to consumer prices even as inflation rates have dropped below the bank target, policy makers said in the minutes of this month’s meeting.

“The alternative of lowering the monetary policy rate was ruled out this time, considering that output gaps and labor market conditions were still tight, posing a latent risk with respect to the medium-term inflation outlook,” according to the minutes published on the bank website yesterday.

Chile’s two-year interest rate swap, which reflects traders’ views of average borrowing costs, rose 12 basis points, or 0.12 percentage point, to 4.65 percent yesterday, the biggest increase since March 30.

The inflation rate in the world’s top copper producer has dropped in the past four months, reaching 2.7 percent in June. Policy makers, who target 3 percent inflation plus or minus 1 percentage point over two years, estimate inflation will close the year at 2.7 percent.

Rate Forecast

The central bank board, led by bank President Rodrigo Vergara, has kept the key interest rate at 5 percent for the past six monthly meetings. The rate will fall to 4.75 percent by November, according to the median estimate of 57 traders and investors surveyed by the bank on July 24.

Brazil has lowered its benchmark rate by 450 basis points since August to shield Latin America’s largest economy from the European debt crisis. Brazil’s economy will grow 2.15 percent this year, less than half the rate of Chile’s 4.5 percent expansion, according to analysts surveyed by Bloomberg.

To contact the reporter on this story: Randall Woods in Santiago at rwoods13@bloomberg.net.

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net.

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