Chile’s Central Bank keeps interest rate at 0.5%, its technical minimum

RIO DE JANEIRO, BRAZIL – The Central Bank of Chile announced on Tuesday that it would maintain its monetary policy interest rate at 0.5%, its technical minimum, while the country continues to promote measures to reactivate the economy, hard hit by the pandemic, which to date has killed more than 30,000 people.

As detailed by the issuing entity in a public statement, the performance of the financial markets in Chile “continues to be particularly affected by idiosyncratic elements”, evidencing a “decoupling” from global trends and an increase in volatility.

According to the organization, the fall of the Selective Stock Price Index (IPSA), the main stock market index of the country, stands out, which has not had a path following the international scenario, where “the short term activity indicators have endorsed a recovery that is still in progress, especially in developed economies”.

Analyzing the Monthly Index of Economic Activity data for April, the Central Bank assured that there is “a degree of adaptation of the economic actors to operate in a context of a pandemic”. However, some sectors continue to lag behind.

As for the labor market, the entity pointed out that it continues to improve “in a heterogeneous manner, with self-employment and informal salaried employment, the lowest qualified workers and women lagging the most”.

After the meeting of the Central Bank Council, it was assured that the Chilean economy “is still affected by the impact of the pandemic and the lag of the labor market in the recovery”, however, “the high dynamism already exhibited by consumption and the additional impulse to private spending represent a relevant change for the macroeconomic scenario of the coming months”.

In this sense, the organization stressed the need to “recalibrate the expansiveness of monetary policy in the coming months”.

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