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Chile's held interest rate highlights South America's strength
16/11/2011
The overall stability of the Latin American economy has been emphasised by the news that the Chilean central bank has kept its benchmark interest rate unchanged for the fifth month running.
The sound economic health of economies in South America, including Chile and Brazil, in the face of the turmoil being experienced in Europe and looming over other parts of the world, is raising South America's attractiveness as an investment destination.
The president of Chile's national bank, Jose De Gregorio, led the five-member policy board this week to keep the overnight interest rate at 5.25. The move confirmed predictions made by 16 economists surveyed by financial information service, Bloomberg.
Observers said that, having raised its key rate by the second fastest amount in the world in the first half of the year, the holding of the current rate means that the country has given itself space to continue to stimulate growth if European debt crisis worsens and its effects on the rest of the world grow more severe.
Alejandro Puente, an economist from Banco Bilbao Vizcaya Argentaria SA, explained, "Although uncertainty continues in Europe, an adverse effect hasn't yet materialised in Chile's real economy. They don't have space to reduce rates, and we don’t think they will for the remainder of this year."
The sound economic health of economies in South America, including Chile and Brazil, in the face of the turmoil being experienced in Europe and looming over other parts of the world, is raising South America's attractiveness as an investment destination.
The president of Chile's national bank, Jose De Gregorio, led the five-member policy board this week to keep the overnight interest rate at 5.25. The move confirmed predictions made by 16 economists surveyed by financial information service, Bloomberg.
Observers said that, having raised its key rate by the second fastest amount in the world in the first half of the year, the holding of the current rate means that the country has given itself space to continue to stimulate growth if European debt crisis worsens and its effects on the rest of the world grow more severe.
Alejandro Puente, an economist from Banco Bilbao Vizcaya Argentaria SA, explained, "Although uncertainty continues in Europe, an adverse effect hasn't yet materialised in Chile's real economy. They don't have space to reduce rates, and we don’t think they will for the remainder of this year."
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