Chile Central Bank Boss Says Inflation Is Within Expectations

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(Bloomberg) — Chile’s inflation has been in line with central bank expectations even after it accelerated more than analyst forecasts last month, Banco Central de Chile Governor Rosanna Costa said.

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Consumer prices will likely suffer from transitory shocks caused by higher transportation and oil prices as well as a weaker currency, but inflation has eased “significantly” and will converge to its target within the policy horizon, Costa said in an interview with El Mercurio newspaper published Sunday.

“We recognize some transitory cost factors that lead us to a somewhat higher projection of inflation in the year, but it converges to the target within the two-year period,” Costa said. “There are upside risks from cost pressures that may be transitory.”

Chile’s consumer prices rose by 0.5% last month, surpassing the estimates from analysts surveyed by Bloomberg and taking the annual inflation rate to 4% from 3.7%.

Read more: Chile’s Inflation Accelerates, Stoking Caution on Rate Cuts

Costa said the central bank’s strategy seeks to provide stability to the economy in the next two years to avoid sharp interest rate cuts. The monetary authority has lowered borrowing costs by 475 basis points since July, to 6.5%.

The bank’s board will hold its next monetary policy meeting on May 23, where economists and traders expect it to slow the pace of its easing cycle for the second straight time by delivering a half-point rate cut to 6%.

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