The general manager of the Central Bank of Chile, Beltran de Ramónin dialogue with Ambit how they have been fighting inflation and anticipated the start of a path of lower rates. The official spoke in the framework of the Monetary and Banking Days 2023.
“The Chilean economy has been successful in solving its economic problems and in resolving the imbalances caused by the pandemic”pointed out Beltrán de Ramón and, although he recognized that they are still far from the 3% inflation goal that they set, and anticipated that they are heading towards a path of reducing monetary policy rates.
The official assured that core inflation is currently 10% in Chile, which was reached thanks to the measures taken. “The reduction was possible thanks to some issues that have been resolved since the end of the pandemic”de Beltran said.
Part of these policies was a rise in the monetary policy rate to 11.25%. “These are very high levels. We were not used to this”said the representative of the Chilean regulator.
The results of monetary policy
The upward path began in July 2021 and, thus, core inflation fell to 9.9% from 11.1%. The Chilean peso has been appreciating and they are confident that in 2024 they will reach the 3% inflation target.
However, he also recognized that the relief of cost pressure helped a lot because oil and food have been falling after the initial bullish shock of the warwhich was also affected by Chile’s political crisis, generated economic uncertainty in the country.
The anti-inflationary cost
However, he admitted, on the other hand, that to lower inflation there must be a cost.
De Beltrán anticipated that “the Chilean economy is going to contract” and expects that private consumption will be reduced this year and investment, too.
Towards the reduction of rates
However, he advanced that if the inflationary deceleration tendencies continue, the monetary policy will go towards a reduction of the interest ratealthough “at a slower rate than desired”.
Source: Ambito
