Chile’s benchmark rate will remain stable through 2018

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Chile’s benchmark rate will remain stable through 2018

Chile's economy

Chile's economy

The short-term benchmark rate to define the cost of bank leverage in the small commodity-producing economy in southern Peru would remain at 2.50%, as estimated, until the fourth quarter of 2018, according to the studies the Central Bank of Chile did with the best specialists and experts in the area.

Two dimensions would be behind the poll of economists and market players consulted: expectations of moderate inflation and a gradual improvement in the productive activity of goods and services.

According to Reuters, the maintenance of the Monetary Policy Rate will occur after the country’s central bank cut 100 key interest rate base points in the first half of the year in order to encourage a downturn in economic activity.

On the other hand and according to the Chilean central survey, surveyed economists projected a GDP increase of 2.0% for September, accumulated closing and 2.7% for the fourth quarter of 2017.

Chile currency

Inflation would reach 0.2% in October, according to analysts and operators. In an 11-month horizon, inflation would be between 2.3 and 2.5%, according to the agency’s details following the survey.

The projection is in line with the target range of the issuing entity of the country: 2.0 to 4.0% maximum

The International Monetary Fund issued the World Economic Outlook and the credit rating agency, for sovereign and private instruments, Fitch Ratings was not far behind and did the same.

The process of economic recovery in Latin America is benefiting from a spike in commodity prices, better external conditions, lower inflation in most countries, monetary easing programs and favorable debt rates, explained Fitch Ratings in a report released on Wednesday to the regional economic press.

However, the company warns that a large part of the Latin American countries is growing below trend and that the potential expansion has been affected by lower investment rates and low productivity.

Fitch and regional governments

For the rating agency, it is auspicious the set of political reforms in the countries where pro-business governments have assumed power lately; but Fitch Ratings said that the impact of corruption cases and an intense electoral calendar in 2017 and 2018 could detract from the reforms, as Reuters explained.

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