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Cautious and gradual
CHILE - Report 11 Dec 2018
Central Bank national accounts for Q3 show that economic activity has slowed significantly. This marks the end of the cyclical recovery. Consumption showed a clear and protracted deceleration, while investment remained relatively dynamic. Exports rebounded, after a slump of a similar magnitude in...

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Bye-bye, cyclical recovery.
CHILE - Report 30 Oct 2018
The Central Bank has raised the Monetary Policy Rate (TPM) to 2.75%, after keeping it at 2.5% for 17 months. The Bank will likely raise the TPM another 25 bp in the next RPM in December. More importantly, the Bank says that, under the base scenario, it will bring the TPM to at least 4% by 2020. ...

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The hawks are out
CHILE - Report 19 Sep 2018
The Central Bank’s September Monetary Policy Report (IPOM) was surprisingly hawkish. It stated that the upward cycle would begin “in coming months,” implying in either mid-October or early December. The Bank’s base scenario is that the monetary policy interest rate will be between 4% and 4.5% dur...

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Piñera’s tax ‟reintegration”
CHILE - Report 27 Aug 2018
One would have thought that Sebastián Piñera would have been much more eager to fix those aspects of Bachelet's reforms that were thought to be so negative for the Chilean economy. Indeed, it is striking that the economy has grown as it has given that all those damaging policies, which some feare...

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CHILE: Cabinet Shuffle
CHILE - In Brief 09 Aug 2018
Although he only shuffled three cabinet posts on Thursday, Chilean President Sebastián Piñera sent a broader message; he is admitting that the honeymoon is over.The two ministers to go were Education Minister Gerardo Varela and Culture Minister Alejandra Perez. Environment Minister Marcela Cubill...

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A clear road ahead
CHILE - Report 01 Aug 2018
In July, the Monthly Index of Economic Activity (IMACEC) once again surprised markets on the upside. Expectations for GDP growth continue to improve – this, despite that in May, the 12-month variation of retail sales fell sharply, coming in below the expectations of even the most pessimistic anal...

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Transiting from depression to euphoria
CHILE - Report 25 Jun 2018
The Central Bank’s June Monetary Policy Report was more hawkish than that of March. The Central Bank is preparing the market for the next cycle of monetary policy tightening, which should start before year-end. Perhaps the most relevant point was a downplay of the risk of a non-convergence rate t...

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The first half of the game is almost over
CHILE - Report 23 May 2018
The Monthly Index of Economic Activity delivered some good news in March – even though its growth was strongly favored by the low comparison base in mining. And business confidence was positive for the fourth consecutive month. Industrial production continued to disappoint. Though retail sales su...

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We waited so long
CHILE - Presentation 30 Apr 2018
After four years of slow growth, the economy seems to be recovering. While low investment and flat credit are caveats, the central bank is almost ready to hike.

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What to expect after the first month
CHILE - Report 23 Apr 2018
Our reading of February’s Monthly Index of Economic Activity is positive, based on the fact that that the 3.6% seasonally adjusted 12-month variation of the IMACEC, excluding mining, was the largest since we’ve started using official data. Retail sales grew at a healthy rate in February, and the ...

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Investors… On your marks, get set…
CHILE - Report 30 Mar 2018
​February’s figures confirmed that inflation is low and will stay low and that inflationary pressures retreated. In addition, Inflation will fluctuate around 2% until July and will stay below 3% for the next two years. In its March quarterly Monetary Policy Report (IPOM in Spanish), the Central B...

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Chile’s New Constitution, but for how long?
CHILE - Report 08 Mar 2018
​On Tuesday President Michelle Bachelet held a signing ceremony at the Presidential Palace at which she introduced a bill of law aimed at putting in motion a new constitution for Chile. The announcement, made on live TV the previous evening, left many observers surprised – not because Bachelet ha...

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High expectations, but beware of the hurricane
CHILE - Report 23 Feb 2018
According to the Monthly Index of Economic Activity (IMACEC), the Chilean economy expanded by a meager 1.6% in 2017. Nevertheless, the fourth quarter of last year marked a turning point. According to the Central Bank, the leading sectors were once again commerce and services, coherent with the st...

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What to expect when you are expecting
CHILE - Report 26 Jan 2018
Felipe Larraín is the future (and past) finance minister. During his previous term, asset-liability management was driven more by political — and to some extent populist — considerations than by economic rationale. Hopefully Larraín will not do the same thing he did at the beginning of the decade...

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The new cabinet: Piñerismo
CHILE - Report 23 Jan 2018
In presidential systems, and especially in those with coalition governments, cabinet formation takes on different meanings. People watch for how cabinet posts are distributed among political parties, how close to gender parity the cabinet is, what the ideological leanings of individual ministers ...