Economics
Chile Central Bank Stuns Market With a Half-Point Rate Cut
- Recovery not enough to close output gap, fuel inflation
- First-quarter data confirmed lower-than-expected growth
Pedestrians pass in front of the Central Bank of Chile in downtown Santiago, Chile.
Photographer: Cristobal Olivares/BloombergThis article is for subscribers only.
Chile’s central bank stunned analysts by cutting its key interest rate by 50 basis points, the biggest reduction in a decade, saying the economy could grow faster without fueling inflation.
Policy makers reduced the benchmark rate to 2.5%, surprising all 18 economists surveyed by Bloomberg. The analysts had expected borrowing costs to be left unchanged. The bank is famed as one of the most predictable in Latin America.