Mario Marcel: The Monetary Policy Report and the Financial Stability Report

Presentation by Mr Mario Marcel, Governor of the Central Bank of Chile, before the Finance Commission of the Honorable Senate of the Republic, Santiago de Chile, 14 June 2018.

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

Central bank speech  | 
27 July 2018

Mr President of the Senate’s Finance Commission, senator Juan Pablo Letelier, senators members of this Commission, ladies, gentlemen,

Thank you for your invitation to present the vision of the Board of the Central Bank of Chile (CBC) about the latest macroeconomic developments, prospects and implications for monetary policy. This vision is detailed in our Monetary Policy Report (the Report) released this morning. The information therein provide the backdrop for the decision adopted by the Board at yesterday’s monetary policy meeting.

In this Report we confirmed that the evolution of the macroeconomic scenario has lowered the risks for the convergence of inflation to 3% within the policy horizon. This risk, that lingered for quarters, has faded in line with the gradual consolidation of the recovery it has shown since mid- last year and which has received an upward inflationary impulse coming from the increase in fuel prices in pesos. Accordingly, the lower bound defined for the 2018 growth range and the headline inflation forecast at December have been revised upward, while we reaffirm the trajectory of gradual convergence of core inflation to the 3% policy target over a two-year horizon. These projections are consistent with the two-year-ahead inflation expectations that have remained well anchored to the target.