Central Bank of Chile Cuts Interest Rate by 25 Basis Points to 5.25%
By lowering the interest rate, the Central Bank aims to encourage borrowing and investment.
The Board of the Central Bank of Chile has decided to lower the interest rate by 25 basis points, bringing it to 5.25% during its penultimate meeting of the year held on Wednesday and Thursday.
This move was made unanimously by the council and aligns with the expectations outlined in recent economic and financial operator surveys.
The decision comes as inflation has shown a decline in September, although it precedes a significant increase in electricity tariffs, which is expected to have a more pronounced impact in October. In its announcement, the bank emphasized that the annual variation of the Consumer Price Index (CPI), based on the adjusted reference series, decreased to 4% in September, with a monthly variation of 0.1%. This figure is below the average estimate of 0.3% projected by analysts.
By lowering the interest rate, the Central Bank aims to encourage borrowing and investment, which could help support economic activity. This move follows a series of adjustments in monetary policy as the bank navigates a complex economic landscape.
Looking ahead, the Central Bank signaled that further rate cuts are likely, albeit at a slower pace. “The Board estimates that, if the central scenario assumptions of the September Monetary Policy Report are realized, the interest rate will continue to decrease towards its neutral level. This will occur at a pace that takes into account the evolution of the macroeconomic scenario and its implications for the trajectory of inflation,” they stated.
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