Rosanna Costa: Chile's September 2024 Monetary Policy Report

Presentation by Ms Rosanna Costa, Governor of the Central Bank of Chile, of the Monetary Policy Report before the Honorable Senate of the Republic, Santiago de Chile, 4 September 2024.

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

Central bank speech  | 
07 October 2024
by Rosanna Costa
PDF full text
(2,137kb)
  |  23 pages

Introduction

Mr. President of the Senate, senator José García Ruminot, honorable senators, ladies, gentlemen: On behalf of the Board of the Central Bank of Chile, I am grateful for your invitation to present the Report that, pursuant to the Constitutional Organic Law of the Central Bank, constitutes our annual account before the Senate.

In complying with this obligation, I will share with you our view of recent macroeconomic and financial developments in the Chilean and international economy, as well as their outlook and implications for the conduct of monetary policy, according to the contents of the September 2024 Monetary Policy Report (IPoM) that we published this morning. This IPoM is inserted in a scenario in which the national economy is advancing towards growing in line with its medium-term trend. The large imbalances of previous years have been resolved at an aggregate level; inflation has dropped to near the 3% target; and monetary policy has significantly reduced its contractionary stance, considering the 25 basis point (bp) reduction that we decided yesterday, we have already accumulated a reduction of 575 bp in the monetary policy rate (MPR).

We face some challenges in the short term. In the second quarter, activity and demand were weaker than at the beginning of the year. Although slower growth in activity was expected compared to the first quarter, the decline was greater than expected. On the demand side, the analysis of the deseasonalized quarterly series highlights the fall in consumption and the stability of investment. As long as the economy evolves as projected in the central scenario, we will continue to reduce the monetary policy rate, taking into account the evolution of the macroeconomic scenario and its implications for inflation. I will address all of this in more detail in a few moments.