Chile cenbank sees green shoots, fresh risks - minutes
By Aislinn Laing
SANTIAGO, Oct 29 (Reuters) - Chile's central bank unanimously opted to keep interest rates at a baseline low this month, agreeing that while the worst of the COVID-19 pandemic was "now behind us" there were fresh risks to face in the medium term, according to minutes released on Friday.
The bank's board said poor performance of the construction, service and mining sectors in August contrasted with "important advances" in the commercial sector which returned to positive territory in economic activity for the first time since February. The latter in large part was due to a law that allowed Chileans to withdraw 10% of their pension funds and to a lesser extent because of emergency payments by the state. It also pointed to a slight improvement in employment figures for the first time since March.
"The data suggested that the worst of the pandemic was behind us," the board said, according to the minutes of the October 14 and 15 meeting.
The bankers gave a nod to the anniversary of intense social protests that broke out in the world's largest copper producer last October and resumed with the lowering of lockdowns, as well as to a constitutional referendum held last Sunday - one of the key demands of the social protests.
"Towards the medium term, the board agreed that it would be essential to remain alert to events that could generate instability in the financial markets and react in a timely and efficient manner," it said.
The board agreed to maintain a baseline interest rate and deploy additional, unconventional methods if required.
"The board agreed that, as in previous meetings, the macroeconomic context caused by the pandemic have no other option but to reinforce the message that monetary policy would continue to be highly expansionary for a prolonged period of time," it said, according to the minutes.
A central bank poll of traders predicted at the start of the month that Chile's interest rate, its lowest in a decade, would remain unchanged for the next year at least. (Reporting by Aislinn Laing Editing by Chizu Nomiyama)
