Chile Holds on Rates

Chile has kept its benchmark interest rate unchanged at 6.5%, the country’s central bank announced Thursday, citing the US crisis and pressures in the global credit market, as well as reduced dynamism in Q1 economic activity. “The central bank seems, admittedly, more concerned with the appreciation of the CLP than with non-tradable inflation, flirting with 10% yoy when the target is 3.00%, while the policy rate is still a neutral 6.25%” Goldman Sachs says. “We believe this is not prudent and we remain of the view that the central bank should not subordinate the still very challenging inflation objective to a growth or exchange rate objective,” the shop says.