MONETARY POLICY REPORT
BEFORE THE
PRESENTATION FINANCE
OF THE OF
COMMISSION HONORABLE SENATE
REPUBLIC
Rosanna Costa
Governor
Central Bank of Chile
30 March 2022
Introduction
Mr. President of the Senate's Finance Commission, senator Juan Antonio Coloma, senators
members of this Commission, ladies, gentlemen,
This is my first presentation as the governor of the Central Bank of Chile before the honorable
Senate's Finance Commission. Being the first woman to hold such an important position adds
an extra dose of responsibility to this great task. I would therefore like to thank this
Commission for the way it has always dealt with the Bank, and I hope that in the coming
years we will not only maintain this relationship, but we will make it increasingly beneficial
for our work and for our country.
In what follows, as we do four times a year, I will share with you the views of the Central
Bank Board on recent macroeconomic developments, with their prospects and implications
for monetary policy. These views are presented in detail in the March 2022 Monetary Policy
Report (MPR) that we published this morning. This background also provides the support
for the decision adopted by the Board at yesterday's monetary policy meeting.
The Report I am presenting to you today shows that inflation and its short-term outlook have
continued to rise, which is certainly a negative impact on the well-being of every
having
person. Furthermore, in our forecasts, which that I will detail in a few minutes, we anticipate
that the annual variation of the CPI will approach levels in the order of 10% by the middle
of this year.
As we have mentioned in our previous analyses, the increase in inflation continues to respond
mainly to the massive overspending observed in the second half of last year, boosted by the
large amount of liquidity available to individuals from the income support packages put in
place at the time.
The impact of this increased demand has been accentuated more recently by a scenario of
significant cost pressures, which have increased again due to the shock to commodity and
food prices caused by the Russian invasion of Ukraine.
Our projections assume that in the latter part of 2022 inflation will begin to converge to the
3% target, a figure that will be reached within the two-year horizon that governs our monetary
policy. For this convergence, it is vital that the economy succeeds in resolving the imbalances
that have accumulated in recent quarters, where adjusting the fiscal and monetary stimuli,
among other factors, is fundamental. Consistent with this, and with a less favorable external
scenario following last year's excessive growth, the economy will expand at a pace somewhat
below its potential in 2022 and 2023, with contractions in private consumption and
investment.
The Board has made a rapid contractionary adjustment to the MPR, which is necessary to
contribute to the closing of the activity gap and the convergence of inflation over the
monetary policy horizon. With yesterday's decision to raise the rate to 7%, we completed an
increase of 650 basis points from July of last year to date.
If the assumptions of our central scenario prove correct, we estimate that future increases in
the MPR would be smaller than those of recent quarters. The risks are significant and the
Board will do everything necessary to ensure that inflation converges to the target, otherwise
we would only be raising costs for all households, especially the poorest ones.
Let me now describe our evaluation of the economic scene and associated risks.
The macroeconomic outlook and forecasts
In the past few months, we have seen that inflation has continued to rise, approaching 8%
annually. In this behavior, a large part of the CPI components posted upward annual
variations. The y-o-y change in core CPI -which excludes volatile prices- went from
nearly 5% at the end of 2021 to 6.5% last February, while the CPI of volatile prices continued
to fluctuate between 10% and 11% annually. Worth noting is the rapid increase in core CPI
for goods, which climbed from around 5% in mid-2021 to close to 9% at the turn of 2022.
Services posted a lower annual variation of almost 5% as several regulated prices were frozen
over recent years and the adjustment of indexed prices lagged (figure 1).
The significant boost to spending during 2021 continues to be the main driver of higher
inflation. Its impact has intensified in a scenario of strong and increasing cost pressures.
Global supply chains have yet to fully recover from the effects of the pandemic and, among
other factors, continue to experience disruptions due to the rise in Covid-19 cases and China's
zero-tolerance policy. The prices of several commodities (e.g., energy, foods, and some
metals) have peaked, a situation exacerbated by the peso's accumulated depreciation over the
last couple of years (figure 2).
All this couples with labor costs rising as supply has not fully recovered its pre-pandemic
conditions. Different sources of qualitative information -the Monthly Index of Business
Confidence (IMCE) and the Business Perceptions Report (IPN)- reflect the companies'
negative assessment of the behavior of their costs and their impact on margins.
The increase in local inflation has gone beyond what we expected in December, stressing
that most of the surprise has been concentrated in the core component of the CPI. Annual
cumulative inflation to February 2022 was close to 1 percentage point higher than forecast
in December's central scenario. More than half of this surprise was accounted for by higher
increases in the prices of the goods that make up core CPI. A smaller part of the surprise
came from food and fuel prices included in its volatile component (figure 3).
In this scenario, the short-term outlook for annual inflation has been revised upwards. In the
central scenario, it will rise to just below 10% annually by the middle of this year, to then
take a downward path and end the year at 5.6%, that is, almost 2 percentage points higher
than we estimated last December.
Several factors combine in this higher projection. In a context where domestic demand
continues at exceptionally high levels, the main factor is the significant and growing cost
pressures leading to steeper price increases. This also suggests that some of the recent
inflation surprises will be more persistent, as they reflect an adjustment of margins following
the deterioration experienced in recent quarters. Add to this the recent rise in the prices of
certain raw materials due to Russia's invasion of Ukraine and a high real exchange rate
(RER). On the other hand, indexations will be made to a higher past inflation, which would
have a special impact on the monthly CPI variations during March and April, with both
figures expected to be high (figure 4).
It is important to keep in mind that high inflation is affecting almost every economy, although
the main causes are not always the same. In the United States and the United Kingdom,
demand-driven and tight labor markets, with subdued supply and upward wage pressures,
stand out. In the Eurozone, energy has been the main driver of inflation, contributing around
half of the increase. In several Latin American countries, the main reason is associated with
higher energy and food prices.
In the central scenario, annual CPI inflation will begin to decline rapidly in the latter part of
2022, hovering around 3% by early 2024. This decline in inflation will be intensified by the
drop in energy and some foods prices, as our scenario considers that the economic effects of
the war will remain contained and supply will adjust, so the impact on these prices will begin
to fade in the second half of the year. Core inflation, on the other hand, will decline more
slowly, more influenced by the reversal of the activity gap. All considered, it will also be
around 3% by early 2024 (figure 5).
A key factor for the convergence of inflation to the target is that the imbalances that
accumulated in the economy during 2021 be resolved. In the central scenario, in 2022 and
2023 the economy will grow somewhat below its potential, a necessary condition to reduce
the gap caused by last year's excessive spending increase. In addition, fuel prices will fall
from their current levels and the RER will decrease, but still remaining above the averages
of the last 15 to 20 years.
Data for late 2021 and early 2022 suggest that the economy may already be on a downward
path from last year's high spending levels, a normalization process that is occurring at a
somewhat faster than anticipated pace.
In line with forecasts in the December Report, GDP grew 11.7% in 2021 -its biggest
increase in several decades-, a result that incorporates a deceleration of activity in most
economic sectors in the latter months of the year.
With the exception of services, every Imacec sectoral aggregate has declined since October
in seasonally-adjusted terms. Trade has suffered the most notorious drop, mainly related to
the reduced demand for durable goods. The deterioration in mining was linked to operational
problems, lower material ore in copper mines and constraints in water availability. The Other
goods category, which includes construction, also showed weaker-than-expected results. In
contrast, personal and business services continued to benefit from the easing of sanitary
containment measures, with mining and trade support activities and health-care services
standing out (figure 6).
On the demand side, private consumption of goods posted a marked decline in the fourth
quarter of 2021, exceeding estimates in the December Report. The surprise was mainly
explained by the drop in durable goods consumption: 11.8% with respect to the previous
quarter in seasonally-adjusted terms. Non-durable goods also fell, although not as much and
in line with expectations (figure 7).
Various indicators confirm that this trend has continued this year for retail trade activity,
supermarket sales, digitally invoiced retail sales, and new car sales, among others. All this is
consistent with the recent months' evolution of nominal imports of consumer goods, which
reversed part of the upward trend they exhibited throughout 2021. This is particularly true in
the case of durable goods.
The context where all of this takes place has the MPR increases being transmitted to market
rates and the effects of the demand-support measures (i.e., fiscal transfers and partial pension
fund withdrawals) gradually diminishing. Actually, although still high by historical
households' available liquidity has been decreasing and savings have been
standards,
increasing at the same time (figure 8).
Investment growth moderated during the fourth quarter, as foreseen in the December Report.
This was particularly influenced by the lower dynamism of the construction & works
component. The recent evolution of investment-related indicators shows a reversal with
respect to 2021. Sales of ready-mix concrete, building permits, and real-estate sales have
been slowing down. The latter is aligned with the significant increase in housing prices and
mortgage interest rates. In the case of machinery & equipment, capital goods imports early
this year showed a moderate downward adjustment, mostly in those items that had benefited
from the boom of demand and automation.
In this scenario, business and consumer perception indicators have turned more pessimistic.
The monthly index of business confidence (IMCE) confirms a downward turn in every sector,
in both the current and the future outlook, especially in construction activity. Furthermore,
the February Business Perceptions Report (IPN) noted that in the past few months companies
had seen their performance stabilize or fall slightly, in a context of strong cost pressures and
significant uncertainty. On the consumers side, the economic perception index (IPEC)
relapsed in February and remains in pessimistic territory (figure 9).
Regarding the projections for these variables, the central scenario assumes private
consumption and gross fixed capital formation will contract during the 2022-2023 period.
Essential in the case of consumption will be the high base of comparison, the reduction in
liquidity accumulated in the last few quarters that I have just commented on, and the lower
availability of credit.
Regarding gross fixed capital formation, tighter financial conditions and the high and
persistent uncertainty will play a key role. Investment surveys and other sources reinforce
this vision of weak investment, especially that related to construction and works. Indeed, the
survey of the Capital Goods Corporation (CBC) shows a fall in investment in large-scale
projects for this and next year (-15% and -28% year-on-year, respectively), together with
mining initiatives being postponed to 2023 or 2024 (figure 10)
Thus, the annual variation in GDP will be negative for several quarters, with activity
projected to grow between 1.0% and 2.0% in 2022 and between -0.25% and +0.75%% in
2023. It is important to note that these estimates differ significantly from private expectations
-the median of the March 2022 Economic Expectations Survey and Consensus Forecast-
which assume that both consumption and investment will continue to expand in 2022 and
2023, and that GDP growth will be above the upper limit of the expected range for each year.
By 2024, once the macroeconomic imbalances have been resolved, it is foreseen that activity
will resume expansion rates in line with its potential, expanding between 2.25% and 3.25%
(table 1).
The scenario of inflation convergence and resolved macroeconomic imbalances is based on
a significant reduction in fiscal spending during 2022. Pending the decree on fiscal
responsibility of the new administration, the central scenario maintains the assumption of
public spending being as committed to under the approved budget and the convergence
trajectory outlined therein, in accordance with indications by the Ministry of Finance.
The projection of the central scenario considers that, despite the higher copper price, the
impulse that Chile will receive from abroad will be lower than we expected in December.
The rise in inflation and the response of central banks will lead to stricter financial conditions,
which is already reflected in the behavior of the prices of different assets. In turn, the global
growth projected for this year is reduced to 3.1% (4.2% in December) and maintains its 3.4%
for 2023.
The war in Ukraine has introduced a new adverse factor into the macroeconomic scenario,
although so far its direct impact remains contained. The conflict is significantly affecting
import prices, especially because of the steep oil price hike compared with last Report's
forecast (around 30% for the 2022-2023 average). In terms of global growth, the unfolding
of the war and the sanctions imposed on Russia will have important repercussions on the
performance of the Eurozone, which will translate into lower growth expected for Chile's
trading partners. As for the response of the financial markets, this has been more important
in Russia, Ukraine and their neighbors and, in the central scenario, it is assumed that the most
intense effects will remain confined to those countries (table 2).
Monetary policy
The Board estimates that if the central scenario assumptions prove right, futures increases in
the MPR will be smaller compared with the last few quarters.
While the MPR increases have been fast and substantial, risks to inflation convergence
persist. The Board will keep a close watch on these risks, ensuring that inflation's
convergence to the target is secured over the two-year monetary policy horizon.
Experts' two-year inflation expectations -the Economic Expectations Survey and the
Financial Traders Survey- have remained above 3% for several months, which is cause for
concern. Breakeven inflation is also high at several horizons, although in this case their levels
are contaminated by premiums which, when discounted, reduce them significantly, as this
Report shows in a box on the subject.
Meanwhile, indicators that measure the perception of households and firms, obtained from
qualitative studies and surveys, show that the rise in inflation is seen as a transitory event,
which will be reversed within a few quarters. Likewise, firms indicate that, for now, higher
inflation expectations have not significantly altered the dynamics of their price formation,
while households believe that the adjustments they have already made to their consuming
behavior will be sufficient to weather the period of higher price increases.
The central scenario of this Report is based on a more persistent than usual inflationary
dynamic, partly as a result of expected inflation levels above the inflation target at the normal
horizons. This reflects the synthesis of available background information on inflation
expectations and the Board's assessment of their effect on inflation dynamics. In addition,
the upper bound of the MPR corridor considers a sensitivity scenario in which inflation is
more persistent, requiring a stronger monetary policy response than depicted in the central
scenario.
The lower bound of the corridor encloses a range where the contraction of activity and
demand is more intense than in the central scenario. The speed with which domestic spending
adjusts will be decisive in assessing how quickly inflation will converge to the target. This
negative trajectory could combine, among other factors, a further deterioration in
expectations and in the labor market, and a greater impact of uncertainty on investment. This
sensitivity calls for a faster reduction in response to activity being weaker than assumed in
the central scenario (figure 11).
In addition to sensitivity tests, scenarios are analyzed in which changes in the economy would
be more significant and where activity would fall outside the range of projections. On this
occasion, the Board paints a scenario where the impact of the war in Ukraine become much
more harmful on the economy. In such a situation, a more severe slowdown or even a global
recession could be triggered, in addition to a significant worsening of financial conditions,
particularly for emerging countries. However, due to this very uncertainty surrounding the
conflict, it is difficult to anticipate what effects would predominate in the MPR decisions if
such a situation were to materialize.
Final thoughts
Dear senators, I would like to end this, my first presentation to the Senate's Finance
Commission, by taking some distance from the current economic data in order to put into
perspective the economic moment we are going through.
Reducing inflation will require further adjustments to the significant macroeconomic
imbalances generated last year, which have been the main cause of inflation growing to levels
unseen since 2008. Achieving this is important not only because inflation is one of the main
concerns of families -and rightly so, as it reduces the purchasing power of their income-
which hurts particularly the poorer income households but also because it is a sine qua non
condition for achieving sustainable growth in line with our potential capacity. In addition,
adjusting imbalances is necessary for stabilizing external accounts. Let us not forget that last
year the current-account deficit reached 6.6 points of GDP, in spite of the high copper prices.
For those less familiar with the particulars of macro analysis, the figures contained in the
Report may not reveal the true magnitude of the challenge, so it seems pertinent to recall that
in 2021 the stimulus package applied in Chile was among the biggest in the world in terms
of economy size, that our economy was among those that grew the most globally, and that
this was driven mainly by the consumption of durable goods, which generates less productive
linkages.
Controlling inflation is a task that takes time, both because of the natural lag with which
monetary policy instruments operate, and because it is necessary to ensure that the population
will not be exposed to disproportionate costs. For this reason, our projections consider that,
despite its high level today, inflation will continue to climb and will approach 10% in the
following months, and will begin to decline only in the second half of the year.
No central bank is comfortable anticipating this type of inflation trajectory. However, this
is the message that I am responsible for communicating in this my first Report to this
Commission, and I do so with the transparency that characterizes our institution.
Recovering macroeconomic balances at the lowest possible cost will require the greatest rigor
and strength in the analysis and implementation, not only of monetary policy, but of all public
policies with a macro impact. The signals given by the Administration regarding the
importance of fiscal discipline and the convenience of focusing efforts on those sectors of
the population that are lagging behind and not on policies of generalized impulse clearly
point in that direction, and are part of our central projection scenario.
The consequences of not doing so speak for themselves. During the past year, on several
occasions my predecessor Mario Marcel, now Minister of Finance, pointed out in this same
forum the risks associated with the massive transfers of resources via pension savings
withdrawals and other policies in a context of economic recovery. Today, after having
implemented one of the biggest stimulus packages among comparable economies, many of
those predictions have come true. Medium-term financial conditions are considerably tighter
and inflation has climbed well beyond the levels that are considered adequate.
Responsibility on this matter is even more urgent in the current environment, marked by high
external and internal uncertainty.
The immeasurable pain and suffering caused by the Russian invasion of Ukraine not only
distresses and challenges us all as human beings, but also raises important questions about
the future of the global political order and the future of the economy. It is very difficult to
anticipate what will happen in the months ahead. The central scenario of our Report assumes
that the conflict will be limited in time and will not spread to other countries. Unfortunately,
however, we cannot rule out the possibility of a different outcome and that much more
complex scenarios will materialize with consequences that are difficult to quantify.
In our country, the process of structural changes we are going through has kept uncertainty
above historical levels, mainly affecting investment decisions.
Certainly, other factors have influenced the evolution of the economy and, in particular,
inflation; some local and others external, all of which are analyzed in this Report.
Among the local ones, it is important to note the negative effect that the pandemic had on the
labor supply. In Chile, as in other economies, labor participation levels have not recovered
at the same pace as employment, which has fueled wage pressures and costs. This has
especially affected women and the over-54 age group. These have also been pressured by the
aforementioned increase in the cost of imported goods and because, unlike other episodes,
the appreciation of the peso responded less to the greater expansion of activity, which has
remained high, a phenomenon associated with the persistence of high uncertainty in the
country.
Among external ones, the disruptions in the international logistics chain due to the sanitary
crisis have been more persistent expected. The relative delay in the normalization of
than
monetary policy and other stimulus policies in the main economies has intensified global
inflationary pressures. More recently, the sharp increase in the prices of energy and other
commodities due to the war in Ukraine has added to price pressures around the world.
High inflation is certainly observed, to a greater or lesser degree, in many economies, but
this does not mean that its transitory quality is guaranteed in Chile. The global ingredients of
inflation are no excuse for not confronting it, especially by addressing those aspects over
which we have greater control because they are of a local nature.
I conclude this presentation by reiterating our commitment to do everything necessary to
achieve the convergence of inflation to the 3% target within the two-year horizon. The
Central Bank of Chile has the staff and the tools necessary to achieve this. Our institution has
successfully dealt with complex situations, always putting the people's welfare first, which
is undoubtedly favored when inflation is low and is stable.
We have developed a policy framework that has proven to be appropriate for our reality,
focusing on the evolution of medium-term inflation, thus combining our role as guarantors
of price stability with a determined stabilization of the business cycle. In this context,
monetary policy has adapted rapidly to changes in the economy and its outlook. These
movements and the policy stance described in this Report should suffice to achieve the
proposed objectives. But, as I mentioned before, monetary policy only achieves its greatest
effectiveness and efficiency when other policies with macroeconomic impact are aimed at
the same objectives. The challenge of containing domestic imbalances is a task that is best
achieved if all efforts are coordinated and directed in the same direction.
Thank you.
FIGURE 1
Inflation (*) Core inflation (*)
(annual change, percent) (annual change, percent)
12 Total Core Volatiles 10 Goods Services
10 8
8 6
6 4
4 2
2 0
0 -2
18 19 20 21 22 18 19 20 21 22
(*) For details on the various groupings and their share in the headline CPI basket, see box IV.1 in
December 2019 Monetary Policy Report, Carlomagno & Sansone (2019), and our Economic Glossary.
Sources: Central Bank of Chile and National Statistics Institute (INE).
FIGURE 2
Commodity prices (1) Maritime freight cost (4)
(index, 2010-2022 average=100) (index, 2018=100)
250 1400 China - U.S. China - Europe
Natural gas Oil (2)
1200
Copper Wheat
200
Metal index (3)
1000
150
800
600
100
400
50
200
0
0
15 16 17 18 19 20 21 22
18 19 20 21 22
(1) Wheat and natural gas in one-month futures. (2) WTI-Brent average barrel. (3) S&P GSCI Industrial Metals.
(4) Fare of shipping a 40-ft container in respective routes.
Source: Bloomberg.
FIGURE 3
Inflation surprises accumulated since December 2021 MP Report (*)
(cumulative monthly contributions, percentage points)
Core goods Core services Volatile foods
1.6
Volatile energy Other volatiles Total
1.2
0.21
0.95
0.29
0.8
0.04
0.4
0.57
0.0
0.17
-0.4
Cumulative difference
(*) For details on the various groupings and their share in the headline CPI basket, see box IV.1 in
December 2019 Monetary Policy Report, Carlomagno & Sansone (2019), and our Economic Glossary.
Sources: Central Bank of Chile and National Statistics Institute (INE).
FIGURE 4
Change in annual inflation forecast at 4Q2022 (1)
(percent)
Demand & others Local costs (2) External costs Forecast change
2.5
2.4
0.4
2.0
1.5
1.2
1.0
0.5
0.8
0.0
(1) Built using the headline CPI inflation in MP Reports of December 2021 and March 2022. (2) Includes effect of
exchange rate variation.
Source: Central Bank of Chile.
FIGURE 5
Inflation forecast (*)
(annual change, percent)
CPI inflation Core inflation (w/o volatiles)
10 CPI Dec.21 Rep Mar.22 Rep
Core CPI Dec.21 MP Report
10
IPoM Mar.22
8
8
6
6
4 4
2
2
0
0
19 20 21 22 23 24
19 20 21 22 23 24
(*) Gray area, as from first quarter of 2022, shows forecast.
Sources: Central Bank of Chile and National Statistics Institute (INE).
FIGURE 6
Imacec by sectors
(index, September 2019 = 100, deseasonalized series)
135 Total Manufacturing Trade Services
125
115
105
95
85
75
Domestic demand
(index, third quarter 2019 = 100, deseasonalized series)
180
Durable goods consumption Non-durable goods consumption
Services consumption GFCF Construction & other works
160
GFCF Machinery & equipment
140
120
100
80
60
19 20 21
Source: Central Bank of Chile.
FIGURE 8
Individuals' real balances
(millions of UFs, daily data)
Individuals' current accounts
Individuals' demand accounts
Individuals' time and savings deposits
1,000
800
600
400
200
0
Jan.19 Jul.19 Jan.20 Jul.20 Jan.21 Jul.21 Jan.22
(*) In January 2022 the Compendium of Bank Accounting Standards of the Financial Market
Commission was updated, which is used in the generation of monetary statistics. This change involved
adapting the monetary compilation instruments of the Central Bank of Chile (from F01 file to SIM01
file).
Source: Central Bank of Chile.
Business and consumer confidence (*)
(diffusion index)
IPEC IMCE: w/o mining IMCE: trade
70
IMCE: construction IMCE: manufacturing
60
50
40
30
20
10
0
Jan.19 May.19 Sep.19 Jan.20 May.20 Sep.20 Jan.21 May.21 Sep.21 Jan.22
(*) Value above (below) 50 indicates optimism (pessimism).
Sources: UAI/ICARE and Gfk/Adimark.
FIGURE 10
CBC: total investment
(billions of dollars)
16
Non mining (exc. real estate and energy) Mining Energy Real estate
12
8
4
0
2020 2021 2022 2023 2024
Source: Capital Goods Corporation (CBC).
Table 1
Domestic scenario
2022 (f) 2023 (f)
2024 (f)
Dec.21 Mar.22 Dec.21 Mar.22 Mar.22
2021
Report Report Report Report Report
(annual change, percent)
GDP 11.7 1.5-2.5 1.0-2.0 0.0-1.0 -0.25/0.75 2.25-3.25
Domestic demand 21.6 -0.5 -1.2 -0.7 -1.1 2.8
Domestic demand (w/o inventory change) 18.0 -0.9 -1.1 -0.6 -0.7 2.8
Gross fixed capital formation 17.6 -2.2 -3.8 0.1 -0.2 2.0
Total consumption 18.2 -0.5 -0.2 -0.7 -0.8 3.1
Private consumption 20.3 -0.2 -0.3 -1.5 -1.1 3.2
Exports of goods and services -1.5 6.0 3.3 4.4 5.4 2.8
Imports of goods and services 31.3 -2.0 -4.7 0.9 0.7 2.7
Current account (% of GDP) -6.6 -3.0 -4.6 -2.9 -3.5 -3.2
Gross national savings (% of GDP) 18.8 19.3 19.7 19.5 20.3 20.5
Nominal gross fixed capital formation (% of GDP) 24.0 20.7 23.1 20.9 23.2 23.2
(f) Forecast.
Source: Central Bank of Chile.
Table 2
International baseline scenario assumptions
2021 2022 (f) 2023 (f) 2024 (f)
Dec.21 Mar.22 Dec.21 Mar.22 Mar.22
Report Report Report Report Report
(annual change, percent)
Terms of trade 11.8 -2.8 -3.1 -4.9 -3.1 -1.5
Trading partners' GDP (e) 6.3 3.9 3.3 3.3 3.3 3.1
World GDP at PPP (e) 6.3 4.2 3.1 3.4 3.4 3.3
Developed economies' GDP at PPP (e) 5.1 4.0 2.9 2.2 2.0 1.8
Emerging economies' GDP at PPP (e) 7.1 4.4 3.2 4.2 4.3 4.3
(level)
LME copper price (US$cent/lb) 423 405 435 360 390 365
Oil price, WTI-Brent average (US$/barrel) 69 70 94 66 83 77
(e) Estimates for 2021. (f) forecasts.
Source: Central Bank of Chile.
FIGURE 11
MPR corridor (*)
(quarterly average, percent)
9.0 9.0
Mar.22 corridor
FTS
8.0 8.0
EES
7.0 7.0
Dec.21 corridor
6.0 6.0
MPR
5.0 Forward 5.0
MPR Mar.2022 meeting
4.0 4.0
3.0 3.0
2.0 2.0
1.0 1.0
0.0 0.0
21.I 22.I 23.I 24.I
21.II 22.II 23.II
21.III 21.IV 22.III 22.IV 23.III 23.IV
(*) The corridor is constructed following the methodology presented in box V.1 of March 2020 MP Report and box V.3 of March
2022 MP Report. It includes the March EES and March FTS prior to the March monetary policy meeting and the quarterly
average smoothed forward curve as of 23 March. This is calculated by extracting the implicit MPR considering the forward
curve over the overnight index swap curve up to 2 years, discounting the fixed rates of each maturity to the simple accrual of
the overnight index swap (ICP). For the current quarter the surveys and the forward curve consider the average daily effective
data and are completed with the respective sources.
Source: Central Bank of Chile.