Friday November 18 2016
Chile Annual GDP Growth Beats Estimates at 1.6%
Joana Taborda | joana.taborda@tradingeconomics.com

The Chilean economy advanced 1.6 percent year-on-year in the third quarter of 2016, the same as an upwardly revised 1.6 percent expansion in the previous period and better than market expectations of 1.4 percent. Household spending accelerated while investment contracted for the first time this year. External trade also contributed positively to growth as imports shrank.

Year-on-year, household spending increased at a faster 2 percent (1.8 percent in the previous period) while government consumption eased slightly (6.9 percent compared to 7.5 percent in the previous period). Gross fixed capital formation shrank 1.2 percent, compared to a 3 percent gain in the previous period as investment in construction declined 1.8 percent and machinery and equipment fell 0.7 percent. Exports rose at a slower 0.5 percent (0.9 percent in the previous period) and imports fell 1.4 percent (0.2 percent in the previous period). 

On the production side, internal trade increased 3.1 percent; transport rose 5 percent and business services edged up 0.1 percent. Agriculture rose 0.7 percent, boosted by production of fresh vegetables. In contrast, mining shrank 0.8 percent, marking the fifth straight quarter of decline. Copper output which accounts for 15 percent of the GDP declined 0.5 percent and remaining extraction fell 3.5 percent, namely gold and silver while iron and coal increased. Manufacturing went down 1.4 percent, mainly due to lower production of drinks/wine and tobacco. In addition, construction shrank 1.4 percent and utilities fell 3.7 percent. 

On a quarterly basis, the economy advanced 0.6 percent, recovering from a 0.4 percent contraction in the previous period and in line with expectations as mining and manufacturing bounced back. 




Friday November 18 2016
Chile Holds Key Rate at 3.5%
Central Bank of Chile | Yekaterina Guchshina | yekaterina@tradingeconomics.com

The Central Bank of Chile left its benchmark monetary policy interest rate unchanged at 3.5 percent on November 16th, 2016, as widely expected. Policymakers said in October, the monthly CPI variation was again unexpectedly low, driving annual inflation to 2.8 percent. At short terms, inflation expectations have dropped, but are near the target of 3 percent at the end of the projection horizon.

Statement by the Central Bank of Chile:

Internationally, the volatility of financial markets increased after the US elections. It is
worth noting the appreciation of the dollar and especially the rise in long-term rates.
Financial conditions facing emerging economies worsened, but remain better than they
were early in the year. Commodity prices have posted mixed movements. The prices of
metals—especially copper—increased, while those for oil and derivatives fell. Activity
indicators and prospects show no important change, but the potential effects of recent
events have yet to become apparent.

In October, the monthly CPI variation was again unexpectedly low, driving annual
inflation to 2.8%. At short terms, inflation expectations have dropped, but are near the
target at the end of the projection horizon. In the third quarter, domestic output and
demand behaved in line with forecasts in the September Monetary Policy Report.
Accordingly, the labor market continues to adjust gradually. Long-term interest rates
have increased.

The Board reiterates its commitment to conduct monetary policy with flexibility, so that
projected inflation stands at 3% over the policy horizon. Any future changes in the
monetary policy rate will depend on the implications of domestic and external
macroeconomic conditions on the inflationary outlook.




Tuesday October 18 2016
Chile Leaves Monetary Policy Steady in October
Central Bank of Chile | Joana Taborda | joana.taborda@tradingeconomics.com

The Central Bank of Chile left its benchmark interest rate unchanged at 3.5 percent on October 18th 2016 as widely expected. Policymakers said September inflation was unusually low at 3.1 percent, signaling the inflation will approach the 3 percent target sooner than expected.

Statement by the Central Bank of Chile:
 
Internationally, monetary and financial conditions are still favorable and long-term interest rates remain low. On the activity side, incoming data brought no big news, pointing to a gradual recovery of world growth next year. Despite fluctuations, the prices of commodities rose during the month, especially oil.
 
On the domestic front, September’s CPI was unexpectedly low, making annual inflation approach 3% sooner than expected. Various expectations indicators place inflation around the target in the projection horizon. Partial third-quarter data continue to point at limited growth in output and demand, consistent with the Monetary Policy Report’s baseline scenario. The labor market continues to adjust gradually.
 
The Board reiterates its commitment to conduct monetary policy with flexibility, so that projected inflation stands at 3% over the policy horizon. Any future changes in the monetary policy rate will depend on the implications of domestic and external macroeconomic conditions on the inflationary outlook.


Friday September 16 2016
Chile Keeps Key Rate on Hold at 3.5%
Central Bank of Chile | Mojdeh Kazemi| mojdeh@tradingeconomics.com

The Central Bank of Chile left its benchmark interest rate unchanged at 3.5 percent on September 15th as widely expected, keeping its neutral stance as inflation has slowed. Last month, policymakers dropped its tightening bias, signalling no rate hikes are expected in the near future due to lower inflationary pressures. Yet, the inflation rate eased to a 30-month low of 3.4 percent in August.

Statement by the Central Bank of Chile:

Internationally, the movements of the financial markets have been dominated by the prospect of what the Federal Reserve will do at its meeting next week. Anyway, despite some volatility, monetary and financial conditions are still favorable and long-term interest rates remain low. On the activity side, the weakness of recent indicators in the United States and the improvement of Chinese figures stand out. Beyond fluctuations, the prices of copper and oil are similar to those of a month ago. 

On the domestic front, annual CPI inflation dropped to 3.4%, in line with forecasts. Expected inflation two years ahead remains at 3%. Partial third-quarter data point at limited growth in output and demand, consistent with the Monetary Policy Report’s baseline scenario. Confidence indicators are still in pessimistic territory. The labor market continues to reflect a gradual deterioration, with a slightly higher unemployment rate. 

The Board reiterates its commitment to conduct monetary policy with flexibility, so that projected inflation stands at 3% over the policy horizon. Any future changes in the monetary policy rate will depend on the implications of domestic and external macroeconomic conditions on the inflationary outlook.


Thursday August 18 2016
Chile Annual GDP Growth Slows to Nearly 2-Year Low in Q2
Joana Taborda | joana.taborda@tradingeconomics.com

The Chilean economy expanded 1.5 percent year-on-year in the second quarter of 2016, slowing from an upwardly revised 2.2 percent growth in the previous period but beating market expectations of a 1.1 percent gain. Yet, it is the lowest growth rate since the third quarter of 2014, due to a slowdown in private spending and a drag in inventories.

Private spending went up at a slower 1.7 percent (2.6 percent in Q1) while government consumption accelerated (7 percent from 4.4 percent in Q1). Gross fixed capital formation increased 2.7 percent, better than a 1.1 percent rise in Q1 due to investment in machinery and equipment (up 9.7 percent from 1 percent in Q1) while construction investment shrank 0.2 percent (+1.2 percent in Q1). In addition, inventories declined and weighed down on the growth for the third consecutive period. Exports grew at a faster 1.2 percent (0.9 percent in Q1), boosted by sales of manufacturing and agricultural products while mining shipments fell, mainly copper. Imports increased 0.6 percent, following a 3.2 percent drop in Q1. 

On the production side, growth was mainly boosted by personal services (up 6 percent compared to 4.7 percent in Q1), internal trade (up 5 percent compared to 4.1 percent in Q1), transportation (up 4.8 percent compared to 4.3 percent in Q1), financial services (4.1 percent, the same as in Q1) and public administration (up 4.1 percent compared to 3.7 percent in Q1), which offset falls in mining (-5.5 percent compared to -1.9 percent in Q1), manufacturing (-1 percent compared to -0.5 percent in Q1) and construction output (-0.1 percent compared to1.1 percent in Q1). 

Considering the first half of the year, the economy expanded 1.9 percent.

On a quarterly basis, the economy shrank 0.4 percent, the first contraction since 2010, dragged down mainly by a 6 percent decline in copper production as lower international prices keep hurting the sector.  Yet, copper accounts for around 15 percent of the country’s GDP and about two-thirds of it is exported. 


Thursday August 11 2016
Chile Holds Interest Rate at 3.5% in August
Central Bank of Chile | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Central Bank of Chile kept its benchmark interest rate on hold at 3.5 percent on August 11th as widely expected, saying inflation returned to the tolerance range while its development will continue to be monitored with special attention. Meanwhile, policymakers voiced concerns about limited economic growth and weak confidence indicators.

Internationally, monetary and financial conditions are still expansionary and long-term interest rates remain low. It is worth noting the increased appetite for risk in global financial markets, particularly for emerging economies’ assets. This has resulted in a drop in their sovereign premia, an increase in their stock markets and an appreciation of their currencies. On aggregate, world growth prospects are generally unchanged. Most commodity prices posted limited declines.

On the domestic front, although July’s inflation was somewhat higher than expected, the annual CPI variation returned to the tolerance range. Expected inflation two years ahead remains at 3%. The evolution of these variables will continue to be monitored with special attention. Second-quarter output and demand data showed limited growth. Confidence indicators are still in pessimistic territory. The labor market continues to reflect a gradual deterioration, but the unemployment rate has remained stable. The peso has appreciated.

The Board reiterates its commitment to conduct monetary policy with flexibility, so that projected inflation stands at 3% over the policy horizon. Any future changes in the monetary policy rate will depend on the implications of domestic and external macroeconomic conditions on the inflationary outlook.


Thursday July 14 2016
Chile Holds Key Rate at 3.5%
Central Bank of Chile | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Central Bank of Chile left its benchmark interest rate unchanged at 3.5 percent on July 14th as widely expected, saying monetary policy will need to continue to normalize in order to ensure the convergence of inflation to the target. Inflation expectations for the next two years remain at 3 percent.

Statement by the Central Bank of Chile:

Internationally, the biggest news has been the limited effects of the UK referendum result. The world growth outlook has seen no significant changes and market expectations point towards more expansionary monetary policies in the developed economies. In this context, after an initial rise in volatility, preference for risk has increased, bringing down long-term interest rates and risk premiums, boosting stock markets and appreciating emerging countries’ currencies. Commodity prices continue to post mixed movements, where an increase in the price of copper stands out.

On the domestic front, June’s CPI variation was somewhat higher than expected, but its path is in line with the forecast in the Monetary Policy Report. Expected inflation two years ahead remains at 3%. The evolution of these variables will continue to be monitored with special attention. Second-quarter output and demand data confirm limited growth. Confidence indicators are still in pessimistic territory. The labor market continues to reflect a deterioration in comparison to early in the year. The peso has appreciated.

The Board estimates that, to ensure the convergence of inflation to the target, monetary policy will need to continue to normalize, at the pace that is implicit in the latest Monetary Policy Report’s baseline scenario. Nonetheless, a significant deviation of inflation’s convergence may change said pace. The Board reiterates its commitment to conduct monetary policy with flexibility, so that projected inflation stands at 3% over the policy horizon.


Thursday June 16 2016
Chile Keeps Monetary Policy on Hold
Central Bank of Chile | Mojdeh Kazemi | mojdeh@tradingeconomics.com

The Central Bank of Chile left its benchmark interest rate on hold at 3.5 percent on June 16th for the fifth straight meeting as widely expected. Policymakers said, inflation will continue to be watched with special attention. The bank also mention the volatility of financial markets as a result of upcoming UK referendum and the Federal Reserve’s monetary policy decision.

Statement by the Central Bank of Chile:

International financial markets remain volatile, very influenced by the upcoming referendum in the UK and the discussion around the Federal Reserve’s monetary policy decision. Long-term interest rates have dropped in the main economies. Globally, stock markets are down and the prices of many commodities have risen. Copper has been an exception. The dollar, with ups and downs, is near where it was last month. The world growth outlook presents no significant changes.

On the domestic front, in May’s CPI variation was somewhat smaller than expected and y-o-y inflation remained at 4.2%. Expected inflation two years ahead remains at 3%. The evolution of these variables will continue to be monitored with special attention. Partial second-quarter output and demand data reflect limited growth. Confidence indicators are still in pessimistic territory, salaried employment is growing at a slow pace, the unemployment rate is still low and nominal wages have slowed.

The Board estimates that, to ensure the convergence of inflation to the target, monetary policy will need to continue to normalize, at the pace that is implicit in the latest Monetary Policy Report’s baseline scenario. Nonetheless, a significant deviation of inflation’s convergence may change said pace. The Board reiterates its commitment to conduct monetary policy with flexibility, so that projected inflation stands at 3% over the policy horizon.


Wednesday May 18 2016
Chile GDP Growth Accelerates to 2% in Q1
Banco Central de Chile | Francisco Caeiro | francisco.caeiro@tradingeconomics.com

The Chilean economy advanced 2 percent year-on-year in the first quarter of 2016, accelerating from a 1.3 percent growth in the previous period. The figure came in better than an expected 1.8 percent expansion, mainly boosted by a net rise in exports.

Main contribution came from net external demand, as exports advanced 2.4 percent (-0.9 percent in Q4) while imports fell 3 percent (-1.8 percent in Q4). Domestic demand went up 0.5 percent (+1 percent in Q4), as household spending grew 1.6 percent (+1.1 percent in Q4) and government consumption rose 5.4 percent (+4.9 percent in Q4). Gross fixed capital formation rebounded to a 1.2 percent increase after shrinking 1.3 percent in the previous period. In contrast, inventories fell 0.5 percent, after a 0.4 percent drop in Q4.

On a quarterly basis, the GDP grew 1.3 percent, following a meager 0.1 percent expansion in the previous period and beating market consensus of 1.2 percent gain.



Tuesday May 17 2016
Chile Leaves Key Rate Unchanged at 3.5%
Central Bank of Chile | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Central Bank of Chile kept its benchmark interest rate on hold at 3.5 percent on May 17th as widely expected, saying global economic and financial developments continue to pose risks. Policymakers also said the inflation rate will remain above 4 percent in the short term while expectations for the next two years remain at 3 percent. The bank has held the rate steady since raising it 25 bps in December, aiming to bring inflation back to target.

Statement by the Central Bank of Chile:

International financial markets are on a similar path to that of previous months. In spite of this, risks remain. Lately, while differing in magnitude, currencies have tended to depreciate with respect to the dollar. Forecasts for world growth do not show significant changes, although forecasts for the United States have been revised downward. Comodity prices rose from last month, with some exceptions, including copper.

On the domestic front, in April CPI inflation was 4.2% annually. Projections suggest that it will remain above 4% for some months. Inflation expectations two years out remain at 3%. The evolution of these variables will continue to be monitored with special attention. In the first quarter, economic activity outperformed estimates in the March Monetary Policy Report; however, confidence indicators are still in pessimistic territory and the labor market experienced a sharper deterioration. The pace of annual wage growth showed no variation.

The Board estimates that, to ensure the convergence of inflation to the target, monetary policy will need to continue to normalize, at a pace that will depend on incoming information and its implications on inflation projections. The Board reiterates its commitment to conduct monetary policy with flexibility, so that projected inflation stands at 3% over the policy horizon.