Chile maintains key rate at 5%, cautious due to global economic uncertainty

From Yahoo Finance: 2025-03-21 18:40:00

Chile’s central bank maintains key interest rate at 5%, citing global economic uncertainty. Policymakers cautious due to inflation risks, geopolitical tensions, and US-China trade tariffs. Peso strengthened by 7% on improved copper prices. Economy showing strong recovery, with GDP up 2.6% in 2024. Central bank to keep rate steady at 5% throughout the year.

US threats of tariffs on Chile’s biggest export, copper, drive global prices up 8%. Central bank notes Chinese demand and US tariff threats influencing copper prices. Peso appreciates 7% due to weakened dollar and higher copper prices. Strong economic data shows recovery in private consumption and investment, with GDP exceeding expectations at 2.6%.

Inflation remains a concern in Chile as consumer prices rose 4.7% in February. Traders expect cost-of-living increases above target in the next two years. Central bank likely to maintain 5% rate throughout the year. Economic forecasts to be released in quarterly monetary policy report on Monday.

Read more: Chile Holds Key Rate as Turbulent Global Economy Clouds Outlook