LONDON, Oct 13 (Reuters) - Inflation in Chile, currently well above the central bank’s tolerance band, will ease to target levels by the second quarter of next year, Governor Rodrigo Vergara said on Monday.
The central bank is widely expected to cut interest rates by a quarter point to 3 percent when it meets this Thursday, a result of slowing growth and strong price growth.
The bank has been in an easing cycle for the past year, having cut rates by 175 basis points.
Vergara said looser monetary policies had been partly responsible for lifting inflation but said it was a short term effect.
“That is a transitory effect and we expect the inflation rate to be back on target by the second quarter of next year,” he told an investment conference.
Inflation in the 12 months to September was 4.9 percent, the sixth month in a row it was above the central bank’s 2-4 percent tolerance range.
Vergara also predicted that growth would accelerate to between 3 percent and 4 percent next year but likely would fall short of the country’s potential 4 percent-plus annual growth rates. (Reporting by Chris Vellacott, writing by Sujata Rao; Editing by Toby Chopra)