Bloomberg News

Chile’s Industrial Output Rises Faster-Than-Forecast 5.2%

October 28, 2011

(Updates with analyst’s comments in fourth paragraph.)

Oct. 28 (Bloomberg) -- Chile’s industrial production rose a faster-than-forecast 5.2 percent in September from the year- earlier, adding to pressure to leave interest rates unchanged even as global growth slows

Industrial sales gained 1.1 percent over the same period, the institute said in a report handed to reporters in Santiago today. The median estimate from 15 economists surveyed by Bloomberg was for output to rise 3.5 percent.

The economy continues to show signs of vigor even as it slows from the first half of the year, when it expanded 8.4 percent, according to central bank minutes published today. Policy makers are unlikely to change course and cut rates next month because Chilean output remains detached from the global slowdown, Juan Pablo Castro, an economist at Banco Santander Chile, said by phone.

“September data basically supports the central bank’s decision that it needs to be a bit cautious because the internal economy isn’t showing increased signs of contagion from the external scenario,” Castro said today. “The rate cut could even be delayed until the beginning of 2012.”

Chile’s one-year interest rate swap, which reflects traders’ views of average borrowing costs, remained unchanged from yesterday’s 4.73 percent at 10:16 a.m. Santiago time.

Rate Discussion

The central bank, which has held its benchmark rate at 5.25 percent for four months, discussed cutting rates by a quarter- point at its Oct. 13 meeting, according to today’s minutes. Policy makers last reduced borrowing costs in July 2009.

While turbulence in the international economy was likely to have an effect on Chile, the nation’s job and credit markets remain “dynamic” and there aren’t any data yet that would justify a rate cut, the bankers said in the minutes.

All five policy makers agreed on the importance of making clear that the bank would act with flexibility to change the path of monetary policy were a worsening global economy to affect Chile’s inflation outlook.

“While it was most likely that the next move in the monetary policy rate would be downwards, there was not yet enough information to take that decision or to think it was something imminent,” one of the bankers said, according to the minutes.

Copper production fell 1.9 percent to 436,734 metric tons in September from the year-earlier period, the statistics institute said. A two-week strike starting July 22 at BHP Billiton Ltd.’s Escondida, the world’s largest copper mine, affected output, the Melbourne-based company said Oct. 18.

Chile’s jobless rate remained unchanged at 7.4 percent in the three months through September from the month earlier period, the institute said in a separate report today. The median estimate of 14 economists surveyed by Bloomberg was for unemployment to fall to 7.3 percent.

--With assistance from Matthew Craze and Sebastian Boyd in Santiago. Editors: Philip Sanders, Harry Maurer

To contact the reporter on this story: Randall Woods in Santiago at

To contact the editor responsible for this story: Joshua Goodman at

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