Rosanna Costa: Chile's June 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, 20 June 2023.

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

Central bank speech  | 
12 July 2023


Mister President of the Senate's Finance Commission, Senator Ricardo Lagos-Weber; senators members of this Commission, ladies, gentlemen,

I am grateful for the Commission's invitation to the Bank to present our views on recent macroeconomic developments, as well as their outlook and implications for monetary policy. This view is presented in detail in our June 2023 Monetary Policy Report, which we published this morning. This background also forms the rationale behind the decision adopted by the Board at yesterday's Monetary Policy Meeting.

Let me begin by emphasizing that the Chilean economy has been making progress in resolving the macroeconomic imbalances accumulated in recent years. In the past few months, activity has continued along its adjustment process, which is ratified by different indicators that show that slack has resumed a trajectory towards levels consistent with achieving the inflation target.

The advancement of this process and the gradual normalization of several factors that put pressure on costs have allowed inflation to decline. Thus, after peaking at 14.1% in August of last year, in May this year the annual variation was 8.7%. Core inflation has also declined, although, in line with expectations and compared with headline inflation, its drop has been slower and smaller. All in all, the economy has been making progress in consolidating its convergence to the 3% target over the two-year horizon.

As for activity and demand, both have generally performed as projected. The main difference is observed in a larger-than-expected drop in the durable component of private consumption such as, for example, automobiles and household appliances. By economic sectors side, mining posted the biggest difference.