© Reuters. FILE PHOTO: The emblem of the Chile’s Central Bank is seen at its headquarters in Santiago, Chile March 24, 2017. REUTERS/Ivan Alvarado/File Photo
SANTIAGO (Reuters) -Chile’s central bank cut its benchmark interest rate on Tuesday by 75 basis points to settle at 8.25% in a unanimous decision, as the nation’s monetary authority sees inflation pressures easing.
In a statement, the central bank said its board believes that bringing inflation in the world’s largest producing nation to its 3% target will require further cuts in the monetary policy rate.
“The size and timing of the cuts will take into account the evolution of the macroeconomic scenario and its implications for inflation,” the bank said in a statement, noting that while inflation has declined last month still exceeded forecasts.
Chile’s November inflation hit 0.7% while economists polled by Reuters had forecast just 0.2%. 12-month inflation continued to slide, reaching 4.8% – its lowest level since August 2021.
In the statement, the central bank maintained its expectation that the rate of rising consumer prices should converge to the target in the second half of 2024, though core inflation will likely get there in the first half of next year.
Since its last monetary policy meeting, it said, the peso has appreciated and long-term interest rates have fallen “significantly”.
The interest rate reduction was larger than the 50-basis-point cut estimated in a central bank poll last week by traders, who also forecast the benchmark rate would reach 5.0% within 12 months.