Chile’s central bank today raised its monetary policy rate (TPM) for the tenth consecutive month to 10.75 percent from 9.75 percent, above market expectations, in a bid to curb rising inflation.
According to the central bank, inflation stood at 13.1 percent annually in July, with the underlying component fluctuating around 10 percent, in line with global inflationary pressures.
In such a scenario, the Chilean central bank said in a statement that it decided to raise the monetary policy rate to the highest level since 1998 as “global growth prospects have deteriorated, and conditions remain unfavorable, especially for emerging economies.”
The central institution pointed to the high volatility of global financial markets, the global appreciation of the dollar, and the fluctuations in the price of copper, Chile’s main export product.
At the local level, the institution pointed out that since the announcement of the monetary intervention, “tensions in the foreign exchange market have eased, volatility has decreased, and the exchange rate has appreciated.”
Long-term interest rates have also stabilized, and the stock market has posted gains, while credit remains weak due to tight financial conditions.
The central bank’s board said Tuesday that future policy rate adjustments would depend on developments in the macroeconomic environment, given the upside risks to inflation and the expectation that it will be above the two-year target range of 3%.