SANTIAGO, June 23 (Reuters) – Chile’s central bank considered raising the benchmark interest rate in its June monetary policy meeting, the entity said in minutes released on Wednesday, before deciding to hold the rate at its technical minimum of 0.5% where it has been for more than a year.
Bank officials discussed an increase to 0.75% as an option, the minutes showed, before ultimately deciding to hold the rate steady, a reflection of rising pressure around Latin America to tighten monetary policy as inflation builds.
“The Board considered that maintaining the MPR (monetary policy rate) at 0.5% was no longer the only possible option, but the option to increase it by 25 basis points, to 0.75%, was also plausible,” the minutes said.
“Fiscal expansion and the dynamism of consumption has led to a macroeconomic scenario over the next two years in which it would be unnecessary to maintain such a high degree of expansion,” the board said.
The central bank added that despite the conversation over a rate increase, it wanted to emphasize that policy would continue to be expansive for a long time ahead.
Brazil’s central bank delivered its third consecutive interest rate increase of 75 basis points earlier this month and raised the specter of larger hikes ahead, with economic growth and inflation stronger than many had expected. (Reporting by Fabian Cambero; Writing by Adam Jourdan; Editing by Jane Merriman)
