Chile Lowers Interest Rate To 5.25%
Date
10/18/2024 12:00:13 AM
(MENAFN- The Rio Times) The Central bank of Chile has reduced its benchmark interest rate to 5.25%. This decision, made unanimously by the Bank's Council, marks a 0.25 percentage point decrease from the previous month's rate of 5.5%.
The Council, led by President Rossana Costa, expects the interest rate to continue declining towards a neutral level. This projection assumes a scenario where inflation decreases to the target of 3% within two years.
The Bank's statement emphasized that future rate adjustments will depend on macroeconomic developments and their impact on inflation. The decision takes into account both domestic and international factors affecting Chile's economy.
Globally, the Bank noted the Federal Reserve's interest rate cuts and China's monetary and fiscal stimulus measures. It also mentioned the risks associated with the escalating conflict in the Middle East.
Financial markets have responded with increases in long-term interest rates in some countries, while the dollar has strengthened against most currencies. Commodity prices, including oil and copper, have shown fluctuations.
The Bank reported that previous rate cuts have already influenced consumer and commercial lending rates. Inflation in Chile decreased to 4% in September, slightly below expectations.
The Central Bank reaffirmed its commitment to conducting flexible monetary policy. This approach aims to balance economic growth with inflation control, a key concern for many Chileans.
Since July 2023, the Bank has consistently lowered the interest rate. This follows a period of eleven consecutive rate hikes that peaked at 11.25% in December 2022 during the pandemic and economic crisis.
The Bank now considers the significant macroeconomic imbalances of previous years to be resolved. This latest rate cut reflects the ongoing efforts to stimulate economic activity while maintaining price stability in Chile.
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