Chile's central bank revises up inflation forecast, sees recovery in 2024

Reuters

Published Sep 07, 2022 10:29AM ET

Updated Sep 07, 2022 02:08PM ET

SANTIAGO (Reuters) -Chile's central bank raised its inflation expectations on Wednesday to 11.4% from 10.8% in its quarterly monetary policy report, reinforcing bets of more rate hikes to come to combat rising prices.

"This greater inflationary persistence requires a more contractionary monetary policy – in nominal and real terms – than that anticipated in the previous report," it said.

The adjustment comes at a time in which real wages are continuing to shrink, job creation has slowed down and the remaining liquidity of the 2021 stimulus measures has been exhausted, it added.

"By the start of 2024 we will see a return of figures closer to the goal," it said.

The bank also revised upward its economic growth forecasts for 2022 to 1.75-2.25% from 1.5-2.25%.

For 2023, however, it predicted a contraction of 0.5-1.5%, from a previous estimate in a range of zero to a 1.0% drop.

Meanwhile, it estimated that copper prices would average $4.00 per pound this year, down from the $4.25 it had previously forecast.

The bank said that the current account deficit should decline in coming quarters, in line with adjusted spending and a more favorable savings-investment balance compared to last year.

It said private consumption had continued to fall from the high levels reached in 2021.

Stripping out seasonal effects, the bank said consumption had fallen 2.4% quarter-on-quarter, a larger drop than expected.