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18 Apr 2014
Latin America EM Express: Chile's central bank holds rates steady in April
FXStreet (Łódź) - Chile's central bank held its monetary policy meeting on Thursday, during which it decided to keep the main interest rate unchanged at 4%, in line with forecasts. The recent pickup in inflation was the main reason for staying on hold.
Nevertheless, in the statement released after the decision was announced, the central bank signaled its readiness to reduce rates further: “The board will consider the possibility of making additional cuts to the policy rate in line with the evolution of domestic and external macroeconomic conditions and its implications on the inflationary outlook.”
The Banco Central de Chile cut borrowing costs four times over the last six months: from 5% to 4.75% in October, then to 4.5% in November, to 4.25% in February and to 4% in March. Meanwhile, inflation started accelerating above 3%, the the midpoint of the central bank's target, reaching 3.2% in February and then 3.5% in March.
Economic data
Brazil released its Unemployment Rate on Thursday, which showed a slide to 5% in March from 5.1% in February, against expectations of a rise to 5.4%.
Brazil's April Mid-month Inflation was also published, revealing a 0.78% increase, up from 0.73% seen previously.
Technicals
The Chilean peso was at 557.26 against the dollar on Thursday, down 11% since the October rate cut. On Friday it was almost unchanged at 557.35.
USD/BRL was down 0.67% at 2.2370 today. On Thursday the daily FXStreet Trend Index was slightly bearish, with the OB/OS Index neutral. RSI sat at 45 at the last close, and has declined to 40 so far today. Daily 2-StDev Volatility Bandwidth was shrinking at 407 pips, with ATR (14) at 271 pips. The 1D 200 SMA was at 2.3065, while the 1D 20 EMA was at 2.2540.
Nevertheless, in the statement released after the decision was announced, the central bank signaled its readiness to reduce rates further: “The board will consider the possibility of making additional cuts to the policy rate in line with the evolution of domestic and external macroeconomic conditions and its implications on the inflationary outlook.”
The Banco Central de Chile cut borrowing costs four times over the last six months: from 5% to 4.75% in October, then to 4.5% in November, to 4.25% in February and to 4% in March. Meanwhile, inflation started accelerating above 3%, the the midpoint of the central bank's target, reaching 3.2% in February and then 3.5% in March.
Economic data
Brazil released its Unemployment Rate on Thursday, which showed a slide to 5% in March from 5.1% in February, against expectations of a rise to 5.4%.
Brazil's April Mid-month Inflation was also published, revealing a 0.78% increase, up from 0.73% seen previously.
Technicals
The Chilean peso was at 557.26 against the dollar on Thursday, down 11% since the October rate cut. On Friday it was almost unchanged at 557.35.
USD/BRL was down 0.67% at 2.2370 today. On Thursday the daily FXStreet Trend Index was slightly bearish, with the OB/OS Index neutral. RSI sat at 45 at the last close, and has declined to 40 so far today. Daily 2-StDev Volatility Bandwidth was shrinking at 407 pips, with ATR (14) at 271 pips. The 1D 200 SMA was at 2.3065, while the 1D 20 EMA was at 2.2540.