Mario Marcel: Chile's June 2021 Monetary Policy 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, 9 June 2021.

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

I. Introduction

Madam President of the Finance Commission of the Senate, senator Ximena Rincón, Senators members of this Commission, ladies, gentlemen,

I am grateful for your invitation to present the view of the Board of the Central Bank of Chile (CBC) on recent macroeconomic developments, their outlook, and implications for monetary policy. This view is contained in detail in the June 2021 Monetary Policy Report published this morning. This background provides the context for the decision adopted by the Board at yesterday's Monetary Policy Meeting.

The last few months have confirmed that the Chilean economy has been making progress in its recovery process. Activity figures brought positive surprises in the first months of 2021, reflecting the strong macroeconomic momentum and the better adaptation of the economy to the sanitary restrictions. In fact, the impact of the quarantines, despite involving almost 90 percent of the national population during April, was considerably milder than we expected and also less compared with figures early into the pandemic.

Private consumption has risen strongly, fueled by the massive fiscal transfers that have been implemented in recent months and the pension savings withdrawals. In fact, private consumption is the fastest growing component of spending, with some of its categories, such as durable consumption, increasing at rates of 50 percent annually in the first quarter. The measures recently approved by Congress will intensify the boost to consumption, while fiscal expansion will be significantly higher than we expected in the March Report.