The Central Bank of Chile unanimously agreed to raise the benchmark interest rate to 4%, amid an accelerated withdrawal of the monetary stimulus to face the galloping inflationary pressures.
Increasing the Monetary Policy Rate (MPR) It began in July, when the agency raised it by 25 points after keeping it for more than a year at the technical minimum of 0.5%; then he adjusted it to 1.5% in August and 2.75% in October.
“The Board foresees that the MPR will continue to rise in the short term, being above its nominal neutral level – which is consistent with the inflation target of 3% – for much of the monetary policy horizon,” said the Bank.
“This will help the economy resolve the imbalances that it has accumulated, which have contributed to the rapid increase in inflation. With this, the activity gap will gradually close, helping to prevent the recent inflationary dynamics from having a persistent impact on the process. price formation, “he added.
While market operators had estimated that the MPR would rise to 3.75% this meeting, analysts they expected it to reach 4 percent.
The bank noted that annualized inflation has continued to advance in recent months, reaching 6.7% in November.
Regarding activity, the governing body pointed out that private expectations have corrected the growth expected for this year upwards, from 11% in October to 11.9% in December.
The local economy has been favored by the aid to households granted by the government to counteract the impact of the coronavirus pandemic on households, as well as by partial withdrawals of savings in pension funds.
“The expectations of households and companies have had a setback in the most recent, marked in part by a greater concern about inflation,” he said.
The Bank will deliver an update to Congress on Wednesday on its macroeconomic projections for this and next year.
Reference-www.eleconomista.com.mx