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FILE PHOTO. A guard guards the door of the Central Bank of Chile in Santiago
SANTIAGO, March 29 (Archyde.com) – Chile’s central bank unanimously agreed on Tuesday to raise the benchmark interest rate to 7% as part of its strategy to counter inflationary pressures.
The vigorous increase in the Monetary Policy Rate (TPM), which began in July of last year, had taken it to 5.5% in January.
While market operators had estimated that the MPR would rise to 7.5% this meeting, analysts expected it to reach 7%.
“The Board estimates that, if the assumptions of the central scenario of the March Report are met, future increases in the MPR would be less than those made in recent quarters,” the Bank said in a statement.
“In any case, this will depend on the evolution of the macroeconomic scenario,” he added.
The local economy has been favored by the aid to households granted by the government to counteract the impact of the coronavirus pandemic, as well as by partial withdrawals of savings in pension funds.
However, the galloping recovery has generated strong pressure on consumer prices.
The bank noted that annualized inflation has continued to rise in recent months and reached 7.8% in February.
“Short-term inflation prospects have risen again, bringing annual inflation closer to 10%. Two-year-term inflation expectations have remained above 3% for several months, a situation that will continue to be monitored by the Board” said the body.
On Wednesday, the issuing body will update all its macroeconomic projections in its Monetary Policy Report (IPoM).
(Report by Fabián Andrés Cambero, edited by Natalia Ramos)