Chile Lowers Inflation Forecast

Chile’s central bank has reduced its forecast of annual inflation in 2006 from 2.8% to 2.7% as oil prices fall back and the peso continues to strengthen. Although consumer prices rose by 3.7% last year, the highest in five years, inflation in the last two months of 2005 slowed, falling by 0.2% in November and 0.3% in December. Last week the central bank left its benchmark lending rate unchanged at 4.5% for a second consecutive month on expectations of falling consumer prices.