Rosanna Costa: Chile's March 2023 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, 5 April 2023.

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

Central bank speech  | 
26 April 2023


Mr. President of the Senate's Finance Commission, senator Ricardo Lagos Weber, senators members of this Commission, ladies, gentlemen,

On behalf of the Central Bank I thank this Commission for inviting us to present our views on recent macroeconomic developments, as well as their prospects and implications for monetary policy. This view is presented in detail in the March 2023 Monetary Policy Report, which we have published this morning. This background is also the rationale behind the decision adopted by the Board at yesterday's Monetary Policy Meeting.

The presentation of this Report comes at a time when inflation is still very high. Although it has eased from the peaks of the third quarter of last year, it is still four times above the 3% target. Moreover, the core part of the CPI has been around 11% for some time now, accumulating a significant upward surprise in recent months. This is something that cannot be overlooked, as we are aware of the cost that this means for our country's families, especially the most vulnerable ones.

There are several factors behind why inflation is taking so long to come down. Most important is that the economy has been unable to reverse the impacts of the overspending it accumulated between 2020 and 2021. A review of the national accounts shows that the level of consumption over the last three years was ultimately much higher than we had thought: almost $4.3 billion more. Moreover, the speed of the economy's adjustment has been slower than expected.

In the projection scenario that I will now share with you, the improved performance in early 2023 leads to an upward revision of this year's GDP growth projection. However, the economy will continue adjusting in the coming quarters. Therefore, for 2024 our projection is corrected downward. With this, the cumulative growth between 2023 and 2024 does not differ much from what was forecast in the December Report.