Chile's Central Bank Keeps Interest Rate Steady at 5.75%

Chile's central bank decided to hold its benchmark interest rate at 5.75% for the first time since its easing cycle began. This follows eight consecutive rate cuts that have reduced the rate by 550 basis points from 11.25% in July. The decision aligns with the bank's strategy, taking into account inflation and macroeconomic factors.

Chile's central bank on Wednesday held its benchmark interest rate at 5.75%, marking the first time since the easing cycle began that the rate has stayed unchanged. The decision, made in a unanimous vote, meets traders' expectations.

This follows a series of eight consecutive rate cuts that reduced the interest rate by a total of 550 basis points from a peak of 11.25% last July. The central bank stated that the decision is in line with its strategy, which aims to consider inflation and the broader macroeconomic scenario as it continues to adjust rates. According to the June IPOM report, the bulk of anticipated rate cuts for the year have already been made in the first half.

A recent poll of central bank traders had predicted the hold decision, with expectations that the rate will decrease to 4.75% within the next 12 months. Additionally, Chile's finance ministry adjusted its annual 2024 inflation estimate slightly down to 3.7%, while traders projected an annualized inflation rate of 3.9% for July, following a slight increase to 4.2% in June.

(With inputs from agencies.)