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BCCh Releases Minutes of March Meeting

CHILE
  • Link to BCCh Minutes: https://www.bcentral.cl/c/document_library/get_fil...
  • On background: “Despite the rapid and significant increases in the MPR in recent quarters, inflation expectations from expert surveys and market prices indicated that risks of further persistence in inflationary dynamics continued.”
    • “There was the geopolitical shock present, which was having a negative impact on supply, implying higher costs and inflationary pressures in the short term, but which could lead to disinflationary effects in the medium term.”
  • On Monetary Policy options: *The Board agreed that the Monetary Policy Rate (MPR) should be further raised at a significant pace and said it weighed hike of 125BPS, 150BPS, 175BPS.
    • “All the Board members agreed that the three options were plausible, but that the 150bp option was the one that best fit in both technical and communicational terms with the intended message to be conveyed. Such a decision left them in a more comfortable position to react to any deviation or to accelerate the adjustment if deemed prudent as new information would become available going forward.”
    • Failure to ensure the convergence of inflation to target “would not only call the Central Bank’s credibility into question, but would also put the economy at risk, as it could end up causing a higher cost in terms of reduced economic activity and employment by weakening its ability to implement a countercyclical monetary policy.”
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