Central Bank delivers strong signal to the market and increases 50 basis points rate
Experts agree that the tightening bias of the press, seeks to contain the medium-term inflationary expectations.
At 50 basis points increase in the Monetary Policy Rate (MPR), the Central Bank gave the signal restrictive than some economists had expected, raising rates from 3.5% to 4% this month.
The document issued by the issuing entity is evidence of concern for the external market, mainly due to political tensions that are seen in Arab countries, which, added to the earthquake and tsunami in Japan, has damaged the market's expectations .
In this scenario adds volatility shown in financial markets and raw materials. "A global inflation actual and expected increases, while a growing number of economies have reduced their monetary stimulus, "says the document.
Locally, the Central Bank recognizes that given the rise in international prices, particularly oil, have increased private inflation expectations. "Figures of activity, employment demand and continue to evolve positively. Inflation has behaved as expected and inflation records are kept bounded, "the statement said.
With this decision the TPM reached its highest level since 2009, a situation that BanChile chief economist Investment Rodrigo Aravena, is a "Change of direction to curb inflationary expectations that were developing in the market." Aravena is very likely that this scenario remain unanchored inflation expectations, the Central Bank again 50 basis points rise in the rate.
The impact that this decision would have on the market, says Aravena, be reflected in the short-term rates would rise. "UF rates increase because the market expected a higher TPM year-end." In terms of the exchange rate, the economist argues that "we will have a downward trend in the short term primarily by the differential with domestic rates is widening even further."
For BBVA's chief economist, Alejandro Puente, the Central Bank's decision would be in response to increased raw material prices. The expert expects a record high inflation in March that could influence the April meeting, the Council of the governing body to raise the rate again to half a percentage point. Recognition
expectations "is what one would expect from a Central Bank is worried about inflation," said economist Patricio Rojas, Rojas & Associates.
"The most important thing that makes the Central Bank, rather than increased, is that it makes a strong recognition inflation expectations have risen above what they were working, and in this context is that the issuer was concerned, "says Rojas.
senior analyst of the Department of Security Studies, César Guzmán says that "this whole scenario could continue beyond that estimated by the Central Bank, due to the high expansionary financial conditions, with the monetary policy interest rate below the neutral, closing the gaps faster production, derived from dynamism of the activity, domestic spending and the labor market. "Meanwhile, the chief economist of BICE Inversiones, Christopher Doberti, explains that the Central Bank tries to provoke a moderation in inflation expectations which are evident in the different surveys. "The intention is to avoid potential second round effects which may hinder the price path to the target range." "We believe the current macroeconomic supply sufficient space to see corrections in the baseline scenario in the next Monetary Policy Report," the economist.
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