Santiago. The referential interest rate in Chile could suffer a new cut in the short term, said the president of the Central Bank on Wednesday, who emphasized that extreme measures such as negative rates or quantitative easing are still far away.
As the world's largest copper producer, Chile has been hit by the trade war between the United States and China, while suffering a persistent drought.
For this reason, the government seeks a greater fiscal stimulus and the governing body lowered its key rate to a minimum of nine years, to 2%.
"What is especially worrying is the impact of trade disputes and other tensions in the world, including Brexit, of course, in trade, in financial markets and in expectations," Mario Marcel told Reuters.
"We would be prepared to add an additional monetary boost if some elements of demand – consumption and investment – behave less dynamically than expected," he added.
"I would not say that there are more chances to make decisions in one type of meeting than in another," Marcel said when asked if the bank is more likely to wait until the new projections.
The bank now follows the underlying inflation data, especially in services, which is generally the most sensitive to the health of the economy.
Marcel and the rest of the board meet at the end of October, while on December 10 they will publish their quarterly monetary policy report, which includes their macroeconomic forecasts.
"I would not say that there are more chances to make decisions in one type of meeting than in another," Marcel said when asked if the bank is more likely to wait until the new projections.
This month, the bank reduced the economic growth forecast to between 2.25% -2.75%, from the price 2.75% -3.5%.
Marcel added that since the last meeting, the activity indicator, inflation data and unemployment figures had been "quite" in line with their expectations.
"We don't see things getting worse, but we don't see things getting better beyond what we expected … but it's too early to say," he said.
If Chile cuts the rate again, it would enter the route towards the historical minimum of 0.5% that it reached in 2009 after the global financial crisis.
While some central banks could take their rates to negative ground in the short term and US President Donald Trump urged the Federal Reserve to do the same, Marcel said such measures are not on the horizon in Chile even though their rates are for under the United States.
"I think it's too early to think about QE (quantitative relief) or other things. We still have room for maneuver with the interest rate," he said.
Quantitative relief aims to boost the economy through the purchase of public debt assets by central banks.
Source link
https://www.americaeconomia.com/economia-mercados/finanzas/banco-central-de-chile-puede-bajar-tasas-pero-es-prematuro-hablar-de
