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UPDATE 2-Chile's central bank cuts interest rate 25 basis points
March 16, 2017 / 9:29 PM / 9 months ago

UPDATE 2-Chile's central bank cuts interest rate 25 basis points

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SANTIAGO, March 16 (Reuters) - Chile’s central bank cut the benchmark interest rate 25 basis points to 3.0 percent at its monthly meeting on Thursday, as expected, and indicated additional easing could be required.

“The board estimates that, if the recent trends of the economic scenario persist, and so do their implications on the medium-term inflation outlook, it could be necessary to increase the monetary impulse,” the bank said, a moderation of its previous bias for probable short-term stimulus.

The decision is in line with a poll of traders released by the central bank last week, in which respondents predicted a 25 basis point cut in March and another similar cut within six months.

Banco BCI economist Antonio Moncado highlighted that in its post-meeting statement, the bank stuck mainly to pre-established facts.

“What is particularly notable for us is that we see a relatively factual statement compared to what we’ve seen in previous months, which could reveal that there are certain differences of opinion within the bank’s board with respect to the current macroeconomic scenario,” he said.

The March cut was the second by the bank this year. In January, the bank cut the rate from 3.5 percent to 3.25 percent. Cooling inflation has given policymakers in the top copper exporter room to address the nation’s sluggish economy.

In a dovish speech earlier in March, Chile’s central bank head, Mario Marcel, said a “more expansive” monetary policy would be necessary to meet inflation targets.

Reporting by Gram Slattery and Felipe Iturrieta; Editing by James Dalgleish

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