Chile cenbank chief: rates to keep falling if economy, inflation stable

"We foresee that the (interest rate) will continue falling," Costa said in a statement published by the bank. Costa noted that there were some factors in previous months that could lead to rising inflation, particularly the depreciation of the peso and the rising cost of fuel worldwide. "This means that the bank has the necessary flexibility to adjust monetary policy, taking into account target inflation and macroeconomic factors," Costa said.

Chile's central bank President Rosanna Costa said on Tuesday that she expects interest rates to keep falling if economic factors and inflation remain stable.

Costa said the bank had already cut the benchmark interest rate by 400 points since last July as "economic developments advances coherently with what was needed for inflation convergence." The last cut was to 7.25% in January. "We foresee that the (interest rate) will continue falling," Costa said in a statement published by the bank.

Costa noted that there were some factors in previous months that could lead to rising inflation, particularly the depreciation of the peso and the rising cost of fuel worldwide. Despite that, the country is on a stronger economic footing than two years ago and "doesn't present significant macroeconomic imbalances and inflation is significantly lower and closer to target," she said.

It added that inflation expectations were still on target for 3% in two years and currently stands at 4.5%, down from a high of 14.1%. "This means that the bank has the necessary flexibility to adjust monetary policy, taking into account target inflation and macroeconomic factors," Costa said.

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