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Chilean Peso Drops due to Probability of Interest Rate Cuts

June 13, 2014 at 20:53 by Vladimir Vyun

10,000-peso bills fanThe Chilean peso dropped today after the nation’s central bank left monetary policy unchanged but hinted that interest rate cuts are probable due to the slack in economic growth.

The Central Bank of Chile maintained its main interest rate at 4 percent at yesterday’s policy meeting. The central bank said in the statement about the domestic economic developments:

Local economic indicators confirm the low dynamism of output and demand. The drop in investment was compounded by a slowdown in private consumption.

As a result, the bank considers lowering borrowing costs in the future:

The Board 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.

USD/CLP 554.2200 to 554.2200 after falling to 553.1500 earlier.

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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