The decision was adopted unanimously by its members.
The Council of the Central Bank of Chile decided this afternoon in its monetary policy meeting (RPM) to unanimously agree to maintain the interest rate at 5.75%.
The decision to maintain it is consistent with the strategy considered in the central scenario of said Report, which foresees that the MPR will continue to reduce during the monetary policy horizon, at a rate that will take into account the evolution of the macroeconomic scenario and its implications for the inflation trajectory.
The Council reaffirms its commitment to conduct monetary policy with flexibility, so that projected inflation is 3% over the two-year horizon.
June inflation was in line with what was forecast in the last Report. The underlying measure—CPI without volatiles—had a lower variation than expected, mainly in goods and due to factors that are considered transitory. The annual variation of the CPI—spliced reference series—was 3.8% and that of the underlying measure at 3.2%. Regarding inflation expectations in two years, both the Economic Expectations Survey (EEE) and the Financial Operators Survey (EOF) are around 3%.
The Council estimates that, if the assumptions of the central scenario of the June Report were realized, the MPR would have accumulated the bulk of the cuts planned for this year during the first half of the year.
GLOBAL SITUATION
As arguments for the decision taken, it was indicated that in the external scenario, global inflation, in general, has continued to decline at a moderate pace, mainly due to a slow reduction in service components.
"In the United States, the June inflation record was below expectations and the labor market has shown signs of moderation at the margin, which has made the market's outlook on the Federal Reserve's monetary policy somewhat less restrictive. In any case, activity in that economy was more dynamic than expected in the second quarter," says the entity's statement.
This contrasts with the limited growth rate observed in the rest of the world, especially due to a greater than expected slowdown in China. "Global growth prospects do not show major changes for this and next year," he adds.
Regarding global financial markets, compared to what was observed in the previous Meeting, long-term interest rates are somewhat lower, both in developed and emerging economies. Stock markets have exhibited mixed performance. The global dollar appreciated. With fluctuations, both the price of oil and copper decreased compared to the previous Meeting, the latter partly impacted by the somewhat weaker signals from the Chinese economy.
In the local financial market, short- and long-term adjustable interest rates have decreased compared to the last Meeting, in a context of nominal rates without major variations. The peso depreciated, in line with the decrease in the price of copper.
The entity highlighted that credit remains weak, especially its commercial component.
"The Bank Credit Survey for the second quarter of 2024 indicates that credit supply conditions have not changed recently for most portfolios, while credit demand remains low in all segments. Loan rates are lower deadlines continue to account for a transfer of the cuts to the Monetary Policy Rate (MPR) in line with usual patterns," it is said in the communication with the media.
It is also highlighted that activity has evolved below that projected in the June Report, while in demand, high-frequency indicators do not suggest major differences.
In May, the non-mining Imacec decreased 0.5% month by month in its seasonally adjusted series (+0.2% annually), a result that was largely explained by specific supply factors. Sectoral activity data for June (INE) showed a performance below expectations in some areas.
Going forward, information from the cadastres of large projects shows a significant increase in the amounts planned for the coming years. The unemployment rate for the moving quarter ended in June remained at 8.3%. Although they remain in pessimistic territory, the expectations of companies and households show some increase recently.
