Chile central bank doubles benchmark interest rate to 1.5%
Reuters
Published Aug 31, 2021 06:43PM ET
By Aislinn Laing
SANTIAGO (Reuters) - Chile's central bank said on Tuesday it would raise its benchmark interest rate to 1.5% from 0.75%, as a rapid COVID-19 vaccination program helps the world's top copper producer resume economic activity and inflation ticks upward.
The bank began to withdraw monetary stimulus last month, lifting the rate to 0.75% after an extended period of maintaining it at 0.5%, its lowest point since the outbreak of the pandemic and associated lockdowns.
The bank's board said in a communique it made the unanimous decision to double the interest rate out of a need "to avoid the accumulation of macroeconomic imbalances that could cause a more persistent increase in inflation."
Externally, it highlighted a sustained global economic recovery and said its move was in keeping with the actions of several other central banks in emerging economies in response to rising inflation.
In Chile, the bank said, financial market volatility persisted because of the further potential for new withdrawals by Chileans from their privately held pension savings, something that central bank chief Mario Marcel has warned could fuel inflation and overheat the economy.
In July, Chile's consumer prices rose 0.8% and rolling 12-month inflation hit 4.5%, the highest level since March 2016, surprising traders who had anticipated inflation would increase by just 0.3% last month.
The increase in prices was led by jumps in the cost of transportation and especially gasoline, Chile's statistics agency, INE, said, although prices for food and non-alcoholic beverages also rose sharply.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.