(Bloomberg) – The Central Bank in Chile stopped the reductions of interest rates and left all options on the table for future borrowing cost adjustments, noting the increasing uncertainty as well as the risks of local and global inflation.
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Policymakers led by Rosana Costa unanimously voted to maintain borrowing costs by 5 % late on Tuesday, as expected by all analysts in Bloomberg Survey. In a accompanying statement, members of the Board of Directors wrote that the weaker bizo, the high costs of employment and an increase in the electricity tariff pays the dynamics of inflation.
“The risk of inflation has increased, which enhances the need to be careful,” they wrote.
While the statement published after the previous average decision in December raised the possibility of price discounts “in the upcoming seasons”, the statement today was more open, saying, “The Board of Directors will evaluate the future movements of the monetary policy rate by looking at the development of the macroeconomic scenario and its effects On the convergence of inflation.
Banker in Central Chile turns more cautious as they ride a tremor in the near term of inflation, which prevented him from slowing it towards a target of 3 %. Wages and electricity costs rise, while the bizo has reached its weakest level since mid -2012, making imports more expensive. At the same time, economic activity is slowly released.
“They point out that the risk of inflation has increased,” said Florence Richie, head of economy and markets in the mood coup. “In addition, they abolish the phrase that indicates that the rate of monetary policy will follow a landmark, and thus avoid giving signs about future movements.”
The exchange rates increased on one year to 13.7 basis points on Wednesday after the price of the Central Bank and the Falcons Statement.
Chile’s decision came a day before the Federal Reserve is expected to stop its mitigation cycle. This step, along with US President Donald Trump’s plans for commercial tariffs and tax reducing, beats the strongest dollar around the world.
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In their statement, Central Banking warned of the inability to predict the global economy. They wrote: “In this context, global financial markets have been very volatile in recent weeks, amid the change of government in the United States and developments in other continuous sources of uncertainty.”
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