(Reuters) – Chile’s central bank considered reducing the benchmark interest rate by either 100 or 125 basis points at its January meeting, with one rate setter thinking it was appropriate to analyze the option of 150 bps, the meeting minutes showed on Thursday.
The Andean nation last month reduced its key rate by 100 basis points to 7.25%, with the nation’s monetary authority seeing inflation pressures easing. The cut, in line with estimates, was not a unanimous decision.
However, the board members agreed that a larger cut “could be a big surprise that might generate unnecessary volatility,” the statement added.
One member said that a cut of 125 bps points or more was, in his view, “the best response to the macro scenario and reduced risks of inflation being lower than desired”.
The board members agreed that inflation was converging to the 3% target at a faster rate than had been expected some time ago.
Despite the split vote, all members agreed that the proper implementation of monetary policy implied meeting the inflation target in an efficient manner, at the lowest possible cost in terms of activity.
(Reporting by Fabian Cambero and Natalia Siniawski; Editing by Andrew Cawthorne, Kirsten Donovan)
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