Chile central bank seen keeping key rate on hold later Thursday
SANTIAGO, Sept 12
SANTIAGO, Sept 12 (Reuters) - Chile's central bank is expected to keep its key interest rate on hold for the 20th consecutive month later on Thursday, following a recent rash of upbeat economic data, including stronger-than-expected growth and unemployment numbers.
Expectations for an imminent rate cut have been scaled back after unemployment hit a low not seen in years in May to July and manufacturing production posted a surprise bounce in July, along with retail sales.
Meanwhile, consumer prices have remained near the bottom end of the central bank's 2 to 4 percent target range.
Twelve of 14 analysts polled by Reuters expected the bank to keep rates on hold, with the remaining two forecasting a 25 basis point cut.
"The latest slew of positive real activity data and the lingering uncertainty about U.S. Fed tapering will likely tilt the needle towards waiting further," Tiago Severo at Goldman Sachs said in a note to clients.
Chile's wait-and-see stance compares with rate hikes in emerging markets like India and Brazil where local currencies have been hit by expectations the U.S. Federal Reserve will withdraw monetary stimulus that supports riskier global assets.
Analysts surveyed by Chile's central bank forecast the rate will remain at 5.0 percent through October, but then be cut by 50 basis points within five months, a poll released on Tuesday showed.
Traders also see the bank keeping the rate on freeze later in the day and subsequently reducing it by 25 basis points within three months.
Some market participants such as Severo acknowledge "a non-negligible probability of a 25 basis points cut" later Thursday in part due to slowing growth and the benign inflation landscape.
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