SANTIAGO, April 3 (Reuters) - Chile’s central bank should move to positive real interest rates to stay apace with the long-term fundamentals of the economy, a bank board member said in an interview published by a local newspaper Sunday.
Joaquin Vial told El Mercurio that while the benchmark interest rate stands at 3.5 percent, inflation expectations are higher.
“It is an extraordinarily expansive rate,” Vial was quoted as saying in the daily. “We cannot continue to have the luxury of real interest rates at zero or negative.”
The central bank has held the interest rate at 3.5 percent since December, as it balances the need to contain inflation with stimulating a sluggish economy that has faltered along with the price of copper and mining investment.
The central bank said on March 28 that it expects inflation to come in at 3.6 percent at the end of the year. (Reporting By Fabian Andres Cambero; Editing by Susan Fenton)