The Council of Central Bank of Chile (BC) meets tomorrow, Thursday 13 to discuss the course that will take Monetary Policy Rate (TPM). This rate, which acts as a guiding rate of the economy is now at 5.0% and could rise to 5.25% .
Reasons: Inflation
There has been a greater impetus to the local economy (see May Imacec ). The acceleration was this indicator is a good sign after the pale April results, which leads to optimistic expectations for results in the coming months. Therefore, to increased economic activity, there more demand pressure on prices.
supply problems in the international oil market and consequent price rise, have led to increases in fuel prices and tariffs of public transportation, strongly affecting IPC June which increased by 0.6%. Therefore, caution is required not exceed the ceiling of the target range that the monetary authority has proposed this year.
Energy insecurity generated to future increases in the price gas, caused by the new tax regime that Argentina imposed on its exports of natural gas. This accentuates for Chile problem "import inflation" , to purchase goods from countries with this problem.
developed Monetary Policy
The increase in interest rates by the Federal Reserve (Fed) U.S. late last June distanced our rate of 5.0% with the U.S. rate of 5.25% . This encourages a degree of arbitration fees, which encourages capital flight to invest in U.S. at a more attractive and less risk.
should add that the interest rate was zero percent in Japan, you may end next Friday when the Bank of Japan (BOJ) raise rates (0.25%) for the first time in six years. Measure that represents a major change in Japanese monetary policy, to enter a cycle setting monetary as central banks in the U.S. and Europe.
Reasons: Inflation
There has been a greater impetus to the local economy (see May Imacec ). The acceleration was this indicator is a good sign after the pale April results, which leads to optimistic expectations for results in the coming months. Therefore, to increased economic activity, there more demand pressure on prices.
supply problems in the international oil market and consequent price rise, have led to increases in fuel prices and tariffs of public transportation, strongly affecting IPC June which increased by 0.6%. Therefore, caution is required not exceed the ceiling of the target range that the monetary authority has proposed this year.
Energy insecurity generated to future increases in the price gas, caused by the new tax regime that Argentina imposed on its exports of natural gas. This accentuates for Chile problem "import inflation" , to purchase goods from countries with this problem.
developed Monetary Policy
The increase in interest rates by the Federal Reserve (Fed) U.S. late last June distanced our rate of 5.0% with the U.S. rate of 5.25% . This encourages a degree of arbitration fees, which encourages capital flight to invest in U.S. at a more attractive and less risk.
should add that the interest rate was zero percent in Japan, you may end next Friday when the Bank of Japan (BOJ) raise rates (0.25%) for the first time in six years. Measure that represents a major change in Japanese monetary policy, to enter a cycle setting monetary as central banks in the U.S. and Europe.
Is it time to put the brakes?
The slow process of policy adjustment monetary policy, conducted by the BC is seen as the most advisable to maintain macroeconomic balance.
however, should not be forgotten that the signs of rising rates ( is waiting two more ) will have a negative impact on the domestic market. Investment and consumption -engines to accelerate growth and absorb the current and the still high unemployment - resent the weight of higher interest rates.
Updated today Friday 14:
The BC issued its usual press release, in which it confirms what the market already guessed: the MPR was raised by 25 basis points to reach 5.25%. However, it is interesting to dwell on the statement and points were:
1 .- ... "available information suggests that the increase in the rate of growth envisaged for the second half could be somewhat lower than expected ". bad thing because it means that the authority does not foresee a growth scenario in line with expectations.
2 .- ... "deliberate adjustments are still needed in the interest rate to keep inflation" ... "The timing of these adjustments will depend on the background to accumulate, may be less prevalent than in recent quarters." I think it speaks for itself, at the next meetings shall levy no fee, but will do so before year's end.
3 .- This shows a path different from that posed by economic agents, since the latter successive hikes expected TPM.
Some interesting sites: As works a meeting of the Chilean Central Bank by a Catholic professor.
An educational site with information bank developed in our country.
An educational site with information bank developed in our country.
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