Chile Seen Keeping Rates Steady

Chile’s central bank monetary policy committee is expected to leave rates unchanged at 5.75% after it meets today. The decision will be swayed by benign recent inflation readings and concerns about the external environment, say analysts. Despite this, Goldman Sachs warns that inflation dynamics remain quite challenging, especially as the Chilean economy is still one of the most indexed in the region. In addition, it faces gasoline and energy tariff increases in the pipeline. “Against that backdrop, in order to remain ahead of the curve and reduce the risk of contamination of other prices in the economy, the central bank might have at some point to resume the rate hiking cycle in order to protect the 2008 inflation target,” says Goldman.