Chile Leaves Rates Unchanged

In line with market expectations, Chile’s central bank has left its monetary policy rate at 0.5% and says it expects to stay at this level at least until Q2. Morgan Stanley forecast that Chile’s central bank would leave the monetary policy rate on hold at 0.5% given perceived risks to growth outlook, muted inflation and stronger peso. “Amid muted inflationary pressures, a stronger exchange rate and ample slack in the economy, we think that the first rate hike is likely to be a third quarter event,” the shop says. Bank of America-Merrill Lynch meanwhile says hikes will start in 2Q. Chile’s central bank eased by 775bp between September 2008 and December 2009, and forecasts a 550bp hike between January 2009 and December 2011.