Chilean central bank cuts basic interest rate

Special Report:Global Financial Crisis

SANTIAGO, Feb. 5 (Chinese media) -- The Central Bank of Chile has approved a basic interest rate reduction of 100 basis points, as inflation has eased in recent weeks, the bank announced Thursday on its website.

With the cut, the biggest since 1998, the interest rate now stands at 7.25 percent, the bank said.

"A marked lower inflation expectation had been consolidated for the coming trimesters, which was an important condition to begin a reduction in the interest rate," said the bank's policy makers.

According to the bank, the Monthly Index of Economy Activity (Imacec) of December 2008 in Chile registered a slight rise of 0.5percent compared with the same month of 2007, and the economy expanded 0.1 percent in the 12 months through November, the slowest growth since 2002.

Among the areas which had a poor performance during the period were mining production, commercial sales and industrial production, affected by the current economic downturn.