SANTIAGO -- Chile's Central Bank left the monetary policy rate unchanged at 3.0% with a neutral bias
in Thursday's policy meeting.
Surprisingly, in the policy statement the bank did not make any reference about recent economic activity or the country’s growth outlook, in what analysts say may have been related to a desire not to spark hopes about a potential interest rate cut or the eventual adoption of an easing bias given that inflation is still on
the high side.
Other analysts thought that it was a way not to contribute to a further worsening in domestic sentiment, given that recent growth data have disappointed.
In the background materials for the meeting, the bank’s staff noted that economic activity in April was
weaker than expected and that spending indicators continued to show "greater weakness at the margin."
The bank also took notice of worsening business confidence, consumer confidence levels that are still in pessimistic territory and of a bleak outlook for the labor market.
On the inflation front, the staff’s report characterized recent results as within expectations; it also noted that inflation expectations have remained stable.
The closing paragraph in the Central Bank’s policy statement was identical to that of the previous meeting, however: “The Board reiterates its commitment to conduct monetary policy with flexibility so that projected inflation stands at 3% over the policy horizon. Any future changes in the monetary policy rate will depend on the implications of domestic and external macroeconomic conditions on the inflationary outlook.”