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Chile central bank keeps key rate unchanged, hints at possible hikes

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Chile central bank keeps key rate unchanged, hints at possible hikes

Banco Central de Chile on Sept. 4 decided to keep the interest rate unchanged at 2.5%, though it hinted at possible rate hikes "in the coming months."

The central bank's policymakers said recent figures "point to the evolution of macroeconomic conditions that make less necessary to maintain the current monetary stimulus."

Annual CPI inflation rose to 2.7% in July from 2.5% in June. The central bank projects inflation to reach 3% over the two-year horizon.

The Chilean economy grew faster than expected in the second quarter on the strength of trade, manufacturing and some services.

"Given the medium-term implications of this scenario, the board believes that the monetary stimulus should start being gradually withdrawn in the coming months," the central bank said.

Meanwhile, policymakers also flagged risks arising from emerging markets, the further depreciation of the Chilean peso and the fall in the copper price.