earthquake

By Jude Webber, Chile correspondent

So much is uncertain for Chile these days as it begins resurrecting itself after the February 27 earthquake estimated to have caused $30bn of damage. No one knows how sharply the economy will contract, or for how long, or how much inflation will spike in the short term. So the central bank’s announcement on March 18 that it is keeping its key interest rate at a rock-bottom 0.5 per cent until the second half of the year gives markets some certainty at least.

Here’s what the bank had to say:

The Board considers that, in the present circumstances-marked especially by the uncertainty associated with the effects of the catastrophe-, holding the monetary policy interest rate at its minimum level of 0.50% at least until the second quarter of 2010 is consistent with projected annual inflation standing at 3% over the policy horizon.

The central bank has proved itself to be both bold and flexible in recent months. Read more