Bilateral Meetings  Remarks on the Chilean Economy since September Monetary Policy Report Rosanna COSTA, Governor of the Central Bank of Chile 2022 IMF/WB Annual Meetings Thursday 13 to Saturday 15, October 2022  Recent Inflation Developments  Currently, inflation is a major concern for most economies and Chile is no exception. In Chile, although with a slight moderation in the last figure —September 2022—, total inflation reached 13.7% yoy, while core inflation —measured by the CPI excluding volatiles— continued to rise to 11.1% yoy. The sum of the August and September data — both figures known after the release of the last Monetary Policy Report (IPoM)— reveals somewhat higher inflation than expected with the surprise coming from food prices, both volatile and non-volatile. •  Inflationary factors  Behind the evolution of inflation there are some common elements to the rest of the world and some others more idiosyncratic. Among the former, there is the increase in external costs since the end of 2021, explained by the increase in the price of raw materials and food due to Russia's invasion of Ukraine, and the disruption of supply chains. Among the internal factors, one of the main elements identified is the domestic spending imbalances accumulated during 2021 —as a result of fiscal aid and pension fund withdrawals, that reached almost 33% of GDP—, and which is especially evident in the still high level of private consumption. Added to this is the increase in wage costs associated with the tight of labor market.

Through a joint effort of institutional stakeholders, we have 2/3  BIS central bankers' speeches  managed to reform the Financial Supervisory Authority and enhance the role of the Deposit Insurance Authority. Together with the Albanian government, we have implemented a comprehensive NPL resolution strategy, which has already brought encouraging results, we have approved a Bank Resolution Law and we have jointly designed a de-euroization strategy, aimed at tackling financial vulnerabilities, improving the transmission mechanism and intensifying the use of the domestic currency. We have also established a new interinstitutional Financial Stability Advisory Group, vested with coordination powers on systemically-important stability–related issues. In order to further develop financial markets, the Albanian authorities have accelerated the development of capital markets, through the establishment of the Albanian Stock Exchange, the licensing and functioning of several investment and asset management funds, the encouragement of the on-going consolidation in the bank and non-bank financial institutions, the tax encouragement of private pension schemes, the on-going efforts to improve the functioning of secondary markets for government papers, etc. However, I am convinced the sharing regional experience would result in an additional impetus to the process. Furthermore, regional solutions can be sought to common problems. This brings me to my last point. Improving regional cooperation Coordination and cooperation cannot run standalone in an ever integrated and intertwined world. The same concept applies to our region, where policy initiatives, aimed at achieving a common objective, should be implemented jointly.