On Friday, the 7th of June 2019, the Central of Chile had unprecedentedly slashed its benchmark interest rate by 50 points to 2.5 percent, as the world’s largest copper producing nation, long-cherished for its bulk of natural resources, had been bracing for a sharp economic slowdown in the wake of a withering Sino-US trade spat.
Aside from that, the Chilean Central Bank had also slashed Chile’s 2019’s economic growth to 2.75 percent from a 3 to 4 percent two months earlier, in the face of a contracting of Chinese economy, one of largest copper importers of the world, which had largely been centering its focus on financial stimulus in order to keep its domestic public financing operational over the recent past.
In point of fact, Chile is the largest copper producer of the world, but its demand had almost entirely been driven by Chinese economy over the last three decades of Chinese expansion. Never the less, following the reveal of surprise decision of rate cut, Chile’s central bank officials was quoted saying that the bank’s decision to trim interest rate had been taken unanimously by the member of its boards.
Adding that the nation’s economic recovery had not been sufficient to pull the inflation lever up, the bank said in its Friday’s (June 7th) statement following its surprise rate cut, “The board considers that ...
the economic recovery has not been sufficient to close the productivity gap and drive inflation. Therefore, it saw it necessary to re-calibrate its monetary impulse”.