Chile’s Central Bank estimates inflation will recede when it reaches 13%

RIO DE JANEIRO, BRAZIL – In the complex economic scenario experienced in Chile, Rosanna Costa, president of the Central Bank, announced that inflation will begin to recede when the country approaches an indicator of 13% in twelve months.

Although the main task of the autonomous entity is to control the effects of inflation, it has not stopped growing. With the publication of the CPI for May, Chile recorded its third consecutive rise of more than 1%, and 12-month inflation reached 11.5%, the highest level since July 1994.

However, Costa commented to La Tercera that inflation would recede when the index reached higher levels.

He also ruled out the possibility of stagflation, i.e., no or low economic growth and current inflation levels being maintained.

However, Tomás Flores, economist and former Undersecretary of Economy in the first government of Sebastián Piñera, commented that such a scenario is possible.

Regarding the monetary policy rate, currently at 9%, the president of the Central Bank commented that applying a too low rate could add risks, just as applying an over-adjustment also brings negative consequences.

Luz María Koch, an economist and the director of the Centro de Estudios Inmobiliarios, explained that both paths represent a challenge for the issuing entity.

Costa also said that inflation in the country will reach 13% this year but fall from those levels to close in 2023 with 2.7%.

With information from BBCL