Chile Policy Makers Were Unanimous in October Rate Decision
Chilean policy makers were unanimous in their decision to keep the benchmark interest rate unchanged at 5 percent last month, according to minutes of the meeting posted on the central bank website today.
The central bank last changed borrowing costs in January, when it made a quarter-point reduction that surprised economists surveyed by Bloomberg. Policy makers didn’t discuss changing borrowing costs in October after last considering a change in May when they studied a quarter-point increase.
Since May, inflation has eased below the central bank’s 3 percent target even as economic growth has exceeded estimates made by analysts in every month except one. Economists polled monthly by the central bank expect policy makers to keep borrowing costs unchanged for at least 17 months as they weigh the local impact of the Euro area’s sovereign-debt crisis.
“The main external risk is related to the outcome of the European crisis,” central bank board member Enrique Marshall said in an Oct. 31 presentation. “The main internal risk is that internal demand won’t moderate as expected.”
One-year interest rate swaps, which reflect traders’ views of average borrowing costs, increased four basis points, or 0.04 percentage point, to 4.96 percent yesterday from the end of September.
Gross domestic product in the world’s largest copper miner increased 5.4 percent in the first nine months of 2012 from last year, according to calculations made by Bloomberg based on central bank data. The government as a result may increase its growth forecast for 2012 beyond 5 percent, the Finance Ministry’s Macroeconomic Coordinator Rodrigo Cerda said Nov. 5.
At the same time, inflation may fall below the central bank’s forecast for December of 2.5 percent, Marshall said in the presentation. Economists in the central bank poll, published Oct. 10, forecast 2.1 percent inflation in December this year and 3 percent at the end of 2013.
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