Economics
Chile's Central Bank Considers Cut In Midst of Venezuelan Immigration Influx
- Bigger economic slack would have allowed for lower rates
- Chile kept key interest rate unchanged at 3% on May 9
This article is for subscribers only.
Chile’s central bank started to consider cutting its benchmark interest rate as policy makers puzzled over the impact of a large influx of immigrants on the economy.
The discussion described in minutes of the central bank’s May 9 monetary policy meeting, when the key rate was left at 3%, show policy makers wondering why a larger workforce and consumer base resulting from the influx of migrants, mostly Venezuelans, didn’t meaningfully change Chile’s growth prospects. A key hypothesis is that economic slack, the so-called output gap, was bigger than they imagined all along, which would have allowed for additional monetary stimulus.