Chile’s economy grew a seasonally adjusted 0.4 per cent in June from May and surged from a year earlier, the central bank said on Monday, led by the retail and manufacturing industries and seen ruling out the chance of an interest rate cut in the near term.
Year over year , the central bank’s IMACEC indicator of economic activity in the world’s top copper producer rose 6.2 per cent in June, well above expectations for 5.3 per cent growth. The IMACEC expanded 5.4 per cent in June 2011 from a year earlier.
Despite easing inflationary pressures, data signaling a slowdown in manufacturing output and turmoil abroad, firm domestic demand and a tight labor market suggest the central bank will keep its key interest rate on hold at its Aug.16 policy meeting.
“It seems the external crisis is only affecting the export sector fairly lightly,” said Sergio Tricio, head of research at the Forex Chile brokerage in Santiago. “You can see that retail and electricity generation, which correspond to domestic demand, are mitigating external effects.”
“This Imacec could strengthen the peso, pending external markets, and these signs that the economy remains solid would seem to definitively rule out the chances of a rate cut in the coming months.”