Chile's Central Bank Cuts Interest Rate

SANTIAGO (Reuters) – Chile's central bank announced on Thursday a reduction of its benchmark interest rate from 5.50% to 5.25%, a decision reached unanimously and aligned with analysts' predictions.

The bank indicated that if the economic conditions described in its September report occur, the interest rate could be further lowered to reach its neutral level.

Furthermore, the bank reaffirmed its flexible policy aimed at reducing inflation to 3% within the next two years.

Analysts surveyed by the bank had forecasted this 25-basis-point decrease, citing a lower risk of persistently high inflation due to external shocks. They project the rate could reach 4.75% in five months.

The bank noted fluctuations in global financial markets, particularly related to oil and copper prices, influenced by the ongoing conflict in the Middle East and Chinese stimulus measures.

As the world's leading copper producer, Chile's domestic activity and demand indicators remain consistent with forecasts, highlighting strong mining performance and stable consumption and investment.

Additionally, inflation expectations for the coming year have decreased, following a drop in inflation to approximately 4% in September.