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Chile: Progressive policy creep
CHILE · In Brief · 18 Mar 2024

It seems that Boric has stopped trying to appeal to the center. His popularity—forever stuck in the 25-30% range—is unlikely to rise, or fall. Looking ahead, Boric told his cabinet, “In the remaining two years of government, (we need) not to make promises, (but) to fulfill them.” Boric, like most...

February CPI and monetary policy implications
CHILE · In Brief · 14 Mar 2024

The second CPI under the newly-designed basket surprised on the upside again, confirming that the new basket inherited the old basket’s volatility. Some of the problem might be attributed to the volatility of the exchange rate and international prices, but this would only affect a limited part of...

When the music's over
CHILE · Report · 04 Mar 2024 · 1 response

The Central Bank took a significant step in January, by reducing the Monetary Policy Rate (TPM) by 100bp and adjusting its baseline scenario to a more accelerated convergence towards the neutral level. The new timeline for the TPM's convergence to its neutral level is set for the second half of 2...

Fires and pensions: When it doesn’t rain it pours
CHILE · In Brief · 05 Feb 2024 · 1 response

It is not uncommon for the Chilean summer to be fairly dry. The country’s central valley barely sees a drop of rain between the months of November and March. As the winters have got drier as well, summer wildfires have become more common. In recent days, several fires have appeared around the cou...

Post-COVID fatigue
CHILE · Report · 28 Dec 2023 · 1 response

The latest Central Bank Monetary Policy Report offers a surprisingly positive outlook for economic activity. But, in our view, activity remains stagnant. The only good news comes from the construction sector, which appears to be at a potential turning point, after hitting historical lows. The ind...

Looking beyond the Chile’s constitutional moment
CHILE · In Brief · 17 Dec 2023

On Sunday, for the second time in as many years, Chileans have voted on a constitutional proposal designed by a democratically elected assembly. And for the second time, they have rejected it, with 55.8% against, versus 44.2% voting in favor. Whereas the 2022 proposal seemed to be far more progre...

Waiting for a new constitution
CHILE · In Brief · 14 Dec 2023

The results of Sunday’s constitutional referendum are anyone’s guess. Most polls have consistently showed that Chileans will reject the most recent proposal. But four years after the 2019 protests which led to a seemingly endless constitutional debate, there is a sense of constitutional and elect...

Fear of floating vs. fear of falling
CHILE · Report · 01 Nov 2023 · 3 responses

The August IMACEC delivered a pretty big surprise -- and not a good one. Beyond the monthly volatility, economic activity has remained stagnant since late 2022, and the output gap continues to narrow. In August, retail sales recorded a negative monthly change for the eighth consecutive month. In ...

Monetary policy update: A return to caution
CHILE · Report · 08 Sep 2023

The September Monetary Policy Report (IPOM) returns to the cautious tone that prevailed prior to July’s Monetary Policy Meeting (RPM). The June CPI led to accelerating cuts, but now the July CPI and the recent depreciation of the exchange rate have caused increased caution, and a slowdown in the ...

When it rains, it pours
CHILE · In Brief · 06 Sep 2023

Since central Chile has been enduring decades of drought, when it rains the results can be catastrophic. And so they were in mid August, when some 200 mm fell in Santiago and the south-central region where agricultural exports come from. The damage, according to the National Farmers’ Association,...

Boric's tax proposal: One more try
CHILE · In Brief · 02 Aug 2023

Recognizing that he lacks the political support to get a major tax reform through the Senate, President Gabriel Boric announced on Tuesday, August 1, a "Fiscal Pact". The first question is, in what way is this a pact, rather than just another tax proposal? With whom did the government pact? Judgi...

A long way down
CHILE · Report · 01 Aug 2023 · 1 response

Economic activity continued to adjust in May. Manufacturing production saw a partial rebound, while consumption continues to adjust in line with income levels, and diminishing excess real household liquidity. May’s figures show that commerce stagnated, and annual contractions deepened. The high c...

On your marks, get set…
CHILE · Report · 27 Jun 2023 · 1 response

The April Monthly Index of Economic Activity (IMACEC) shows that the economic slowdown trend unfortunately continues. The weakness primarily stems from underperforming commerce and stagnant services. Nor is the manufacturing production index offering much reason to celebrate. Consumption continue...

Digesting Boric's marathon speech
CHILE · In Brief · 06 Jun 2023

President Gabriel Boric delivered his second state of the union speech last week. These speeches tend to offer summaries of accomplishments and lists of promises for the future, often sprinkled with figures and statistics. There was some of that on 1 June – certainly a lot of promises. But it see...

Sailing into the unknown
CHILE · Report · 25 May 2023

The Monthly Index of Economic Activity (IMACEC) for March confirms the ongoing decline in consumption, and stagnation in economic activity. National accounts figures for Q1 2023 highlight the weakness of consumption in a context of high inflation, elevated interest rates and weak consumer confide...

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