In its statement, the issuing authority reiterated its message that the withdrawal of monetary incentives would be "gradual and cautious".
After the December break, the Central Bank Board decided to continue the monetary easing process by increasing the monetary policy rate (MPR) by 25 basis points, leaving it at 3.0%.
The process that began in October is part of the economic recovery that local activity was experiencing in 2018, reaching GDP growth of close to 4%.
The diagnosis that economic dynamics has started to be necessary to raise the rate to a neutral level – from 4% to 4.5% – was already offered by the publishing institute in the September monetary policy report (Monetary Policy Report). In the past, the Council's most optimistic tone aimed at eliminating power shortages did not create a consensus on the market, which has not been resolved so far, as this factor is not observed and depends on growth estimates. economic potential.
In recent months, the debate has focused on the trajectory that the TPM will follow, given the wind against the international scenario, where concerns about commercial war, the cooling of the Chinese economy and other political factors could mean lower economic growth in Chile.
At that, most markets expect the decision rate to be close to 3.5% by 2019, although some companies, such as Itaú, have raised the rate to 3.75%.
Graduality and caution
In a press release published this afternoon, the autonomous unit stated that "macroeconomic conditions continue to justify a gradual reduction of monetary incentives in line with the provisions of the last monetary policy report".
At the same time, they recalled that the process would be "gradual and cautious", thus preserving the tone introduced at the December Monetary Policy Meeting (RMP).
In addition, he announced that the next IPO "will pay particular attention to the development of the international scenario and its impact on inflation convergence to the target".
The decision was taken before the members of the Council, consisting of Alberto Naudón, Rosanna Costa, Pablo García, unanimity, in addition to Vice-President Joaquín Vial and President Mario Marcel.
Four quarters recover dynamics
In its communication, the Council refers to the fact that, in the last quarter of the year, "the economy returned to dynamism as envisaged in the December monetary policy report", noting that the activity of mining-related objects "accelerated", in particular the investment-linked branches.
In this context, he emphasized "the dynamics of imports of capital goods, the upward revision of the CBC Land Register and positive figures for construction".
With regard to prices, the Communication emphasizes that the lowest accumulated inflation in 2018, which ended at 2.6% below the 3% target, "mainly affected the fall in component prices". more volatile (energy and food). ”
Meanwhile, he noted that "prices that are most sensitive to activity differences, such as unregulated IPCSAE services, continued to rise gradually," and noted that while "inflation expectations until December 2019 were reduced to 2.8%" over the years they remain within 3%.
Moderation of global growth
As regards the external situation, the Communication acknowledges that "the latest data point to a lower than expected global economic growth rate, coupled with the volatility of financial markets and the political and economic risks that remain."
In this context, it points out that "economic expectations have worsened" in both developed and emerging countries, where the Chinese case has led to "their institutions announcing new incentives".
The contrast is characterized by the United States, where the latest data is still dynamic.
They said central banks have indicated "the speed at which their monetary policy normalizes, which is included in market prices".