On Thursday, Chile’s central bank made a unanimous decision to lower its benchmark interest rate by 50 basis points, bringing it to 9.00%. This move comes as the country’s central monetary authority believes that inflation pressures are starting to ease.
In recent months, inflation in Chile has been dropping more quickly than what the market anticipated. In September, it stood at 5.1% annually, down from 5.3% the previous month and a high of 14.1% back in August 2022.
It’s worth noting that the rate cut of 50 basis points was smaller than what analysts had expected. Many had predicted a reduction of 75 basis points based on a central bank poll.
The central bank’s board cited “global developments” as one of the factors influencing their decision. This means that they are taking into account not only local but also international economic factors when adjusting the interest rate.
According to the bank, the global situation is getting worse due to a mix of real economic factors, financial issues, and geopolitical risks. They expressed concern about the increasing tensions in the global financial markets.
As a response to these concerns, the bank’s board has decided to put on hold a $10 billion program aimed at replenishing and expanding the country’s international reserves, which they had announced back in June.
