Chile Lowers Key Rate By 25 Bps

(RTTNews) - Chile's central bank reduced its key rate by a quarter point as growth in output and demand slowed more sharply than expected and it hinted at additional rate cuts going forward.

The central bank lowered its monetary policy interest rate to 3.50 percent from 3.75 percent, the bank said in a statement late Thursday. The bank reduced its rate by a quarter point for the sixth time since last October.

The board said that it will consider the possibility of making additional cuts to the monetary policy rate in line with the evolution of domestic and external macroeconomic conditions and its implications on the inflationary outlook.

At the same time, the board also reiterated that it is committed to maintain inflation at 3 percent over the policy horizon.

Headline inflation was 4.5 percent in July. It expects inflation to stay above the upper bound of the tolerance range still for some months and then to return to the target.

"This evolution will continue to be monitored with special attention," it said.

Local economic indicators show that the pace of expansion of output and demand has slowed more sharply than expected. The drop in investment has been compounded by a more marked slowdown in private consumption, the bank said.