Background on the Situation
On April 2, U.S. President Donald Trump announced reciprocal tariffs, which ultimately resulted in a 10% global tariff on most Latin American countries, according to the technical body of the United Nations.
China was hit hardest, and Beijing responded with tariffs on U.S. products.
Banco Central de Chile’s Response
The Banco Central de Chile (BC) decided unanimously on Tuesday to keep its policy interest rate at 5% as a precautionary measure amidst the ongoing global trade war.
In a statement, the central bank acknowledged that “the magnitude and timing of these effects on the local economy remain uncertain” and emphasized that “caution is still necessary.”
Economic Projections and Previous Actions
For the entirety of 2025, the Banco Central projects a GDP growth rate within a range of 1.75% to 2.75 percent.
This marks the third consecutive time that the Banco Central has maintained the policy interest rate, following reductions starting from June 2023 when it stood at 11.25 percent.
Key Questions and Answers
- Who is Donald Trump and why is he relevant? Donald Trump is the former U.S. President who initiated the global trade war by imposing tariffs on various countries, including Latin American nations and China.
- What is the current interest rate decision by Banco Central de Chile? The Banco Central de Chile has decided to keep its policy interest rate at 5% as a precaution against the uncertainties caused by the global trade war.
- What are the economic projections for Chile? The Banco Central projects a GDP growth rate between 1.75% and 2.75% for the year 2025.
- How many times has the Banco Central adjusted the policy interest rate since June 2023? The Banco Central has maintained the policy interest rate for three consecutive times, following reductions that brought it down from 11.25% in June 2023.
