CHILE-FINANCE: Interest Rates Lowered to Decrease Inflation

SANTIAGO, Nov 12 (IPS) - Interest rates in Chile will be lowered in order to meet the goal of eight percent inflation for 1995, Finance Minister Eduardo Aninat and Central Bank president Roberto Zahler announced.

Economic reactivisation permitted the Central Bank to reduce the interest rate on 90 day loans to 6.1 percent, following a decrease from 6.5 to 6.25 percent in October.

This new drop in interest rates is also aimed at stimulating the production sector, reflecting the government's concern about increasing unemployment, which rose from 4.5 percent in Dec.1993 to 6.7 percent this September .

Business groups also want reduced interest rates in case the local currency were to fall further against the dollar, as the low exchange rate is affecting agricultural and manufacturing exports.

The government also increased the authorised level of investment abroad for pension funds, insurance companies and savings cooperatives.

The state budget for 1995, currently under debate in Parliament, included an increase in the consumer price index of nine percent, though this has recently been reduced.

Local analysts say the measures are important, claiming that Chilean President Eduardo Frei is preparing the ground to sustain low inflation and steadily increase the Gross Domestic Product (GDP) in 1995.

In 1993, the country saw inflation of 12.2 percent as the GDP rose 6.3 percent, while for 1994 the predicted final figures for inflation arenine or ten percent and a GDP increase of under five percent.

Unemployment generally decreases in the last quarter, due to seasonal hiring and an increased demand for agricultural labourers during the fruit harvests.

However, the strongest push to create employment will occur from 1995 onwards, when the economic measures and the planned social programme will combine to form a national anti-poverty drive.

© Inter Press Service (2014) — All Rights Reserved. Original source: Inter Press Service

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