Santiago. The Central Bank of Chile (BC) reduced the monetary policy rate (TPM) by a quarter of a percentage point (0.25 points) on Tuesday to 5.5 percent, despite the loss of momentum in local activity in the second quarter and a higher-than-expected rise in inflation.
After maintaining the rate in July, the Central Bank resumed the reductions it had been applying since June 2023, when it was at 11.25 percent. The decision was taken unanimously by the Board of the entity.
The Central Bank reported that, despite economic growth in July (4.2 percent), “activity lost momentum during the second quarter.” “Although this was expected after the high dynamism at the beginning of the year, the fall was greater than expected,” it added.
In the second quarter of 2024, Chilean GDP fell 0.6 percent compared to the same period in 2023.
The BC added that “the increase in total inflation was somewhat greater than that forecast in the Monetary Policy Report (IPoM) for June.”
In July, annual inflation stood at 4.6 percent, the National Statistics Institute said, far from the 12.8 percent in 2022, the highest in three decades.
For the whole of 2024, the BC projects GDP growth in a range of 1.5 to 2.5 percent and inflation ending at 4.2 percent.
The Council expects that, if the scenarios envisaged for the next Monetary Policy Report in September materialise, there could be further reductions in the MPR during the rest of the year.
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– 2024-09-07 15:44:43
