Rosanna Costa: Chile's June 2022 Monetary Policy Report

Presentation by Ms Rosanna Costa, Governor of the Central Bank of Chile, before the Finance Commission of the Honourable Senate of the Republic, Santiago de Chile, 8 June 2022.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Introduction

Mr. President of the Finance Commission of the Senate, senator Juan Antonio Coloma; senators members of this Commission, ladies, gentlemen,

Let me begin by thanking the Commission for inviting the Bank to share our views on recent macroeconomic developments, their outlook and implications for monetary policy. This view is presented in detail in the June 2022 Monetary Policy Report, which we have published this morning. This background is also the rationale behind the decision taken by the Board at yesterday's Monetary Policy Meeting.

I need to start by noting that inflation in Chile is at its highest level in decades. The rising inflation phenomenon is affecting many economies; however, the main causes of this increase vary from one country to another. In Chile, the main factor behind the rise in inflation continues to be the sharp increase in demand during 2021. Available estimates show that about two-thirds of the increase in cumulative inflation since the beginning of 2021 is attributable to domestic factors. This takes into account both the impact of higher demand and the significant depreciation of the peso over the past two years, much of which stems from local factors.