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Peso Gains Even as Chilean Central Bank Lowers Main Rate

March 14, 2014 at 12:28 by Vladimir Vyun

10,000-peso bills fanThe Chilean peso managed to log gains today even after the nation’s central bank cut its monetary policy interest rate yesterday for the fourth time in six months.

The Central Bank of Chile lowered its key interest rate by 25 basis points to 4 percent. The bank said about the state of the global economy:

Internationally, incoming information confirms the outlook of gradual recovery of the developed economies, while projections for emerging markets, particularly Latin America, have receded.

Regarding the domestic economy, the central bank was rather pessimistic:

The Chilean economy has continued to lose strength. Domestic output and demand have grown less than assumed in the Monetary Policy Report, particularly in investment-related sectors.

The bank also suggested that additional interest rate cuts are possible:

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

USD/CLP was down from 574.50 to 572.80 as of 12:28 GMT today and its daily low was at 571.20.

If you have any questions, comments or opinions regarding the Chilean Peso, feel free to post them using the commentary form below.

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