Bloomberg News

Chile Central Bank Analysts Stress Pick-Up in Global Economy

February 13, 2012

(Updates with comments from central bank researchers in second paragraph.)

Feb. 13 (Bloomberg) -- Economists at Chile’s central bank stressed the recent better-than-expected news on the global economy, such as the January U.S. jobless report, one day before policy makers meet for their next rate decision.

“More calm has been seen in markets, with a decline in risk premiums, a generalized appreciation of currencies against the U.S. dollar and an increase in the price of raw materials,” the bank’s research department said in a report on the institution’s website today.

Domestically, the biggest surprise was the 5.3 percent increase in economic activity in December from the previous year, the researchers said. Chile’s gross domestic product may have grown 6.3 percent last year, the fastest expansion in more than a decade, according to the report.

Still, growth in domestic demand is showing some signs of moderating, while inflation eased to 4.2 percent in January, in line with estimates, the economists wrote. Two-year inflation forecasts are anchored about the bank target, even as one-year estimates grew “in the margin,” economists said.

Chile’s central bank targets annual inflation of 3 percent, plus or minus 1 percentage point over 24 months. Two-year breakeven inflation, which is derived by the difference between nominal and inflation-indexed yields, was 3.09 percent today.

Chile’s peso fell 0.2 percent to 479.8 per dollar today from 478.80 on Feb. 10.

--Editors: Philip Sanders, Robert Jameson

To contact the reporter on this story: Randall Woods in Santiago at rwoods13@bloomberg.net.

To contact the editor responsible for this story: Philip Sanders at psanders@bloomberg.net.


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