SANTIAGO, Nov 6 (Reuters) - Chilean central bank policymakers weighed maintaining the interest rate at their mid-October meeting before deciding to increase it by a quarter percentage point to 2.75 percent, according to minutes released on Tuesday.
The move marked the end of a long cycle of expansive monetary policy, but came just as monthly economic activity has begun to slowly trend downwards after several quarters of faster-than-expected growth.
Chilean economic activity rose 2.3 percent in September from the same month a year ago, its worst showing in the past year, the central bank said on Monday.
The bank’s monetary policy committee said it had anticipated the recent, short-term sluggishness, but added that four consecutive quarters of faster-than-expected growth in gross domestic product (GDP) suggested it was the “opportune moment to initiate the process of normalizing monetary policy.”
Chile’s consumer price index has also nudged gradually upwards to 0.3 percent in September from 0.2 percent in August, the country’s statistics agency announced last month, with inflation in the 12 months to September at 3.1 percent.
“[The decision] is an expression of the achievements of the Chilean economy in the past year and not a response to a more imminent issue with inflation,” the committee said in its minutes. (Reporting by Dave Sherwood Editing by Chizu Nomiyama)