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Government Growth

In the first five months of the year, the growth of the Chilean economy was 3.32%. Really a modest result for previous expectations that aimed at a 5% growth, although subsequently the Central Bank has lowered its projections to an increase of between 4 and 4.5 percent. Inflation also gives respite to the Chilean economy, already unaccustomed to this evil. In the interannual variation, to June, inflation accelerated to 9.5% from 8.9% recorded to may, a value well above the goal of the Central Bank which is 3%, with a tolerance range of 1 percentage point for both sides in a horizon of two years. With slower growth expected and higher than expected inflation, the debate remains open in Chile on what steps to follow. This situation, Chile, Edmundo Perez Yoma, Vice-President, admitted that the figures in the field of the economy are not good. Contact information is here: cornell capital. We are with high inflation, with low growth. Last week, meanwhile, Bachelet said that his Government studying new alternatives to deal with the high inflation of the country: in different areas will be looking at all the measures that are required to take so that we can meet this inflation, although obviously this world is affecting our people.

Against this background, next Thursday, the Central Bank of Chile, must decide on its benchmark rate, which would be increased by 50 basis points in the view of analysts. In an interview conducted by the Chilean strategy magazine, the Chief Economist of the BBVA in Chile, Miguel Cardoso, acknowledged that he expected an increase in the benchmark rate by the Central Bank of Chile, in the order of the 50 basic points, not for its effect on demand, but rather by the expectations: at least, we believe that the effect on demand is moderate. The rise will go more by trying to keep anchored expectations; wage negotiations do not make with past inflation and that this does not influence prospects according to Cardoso, for addressing the inflation problem Chile: must retain the structural surplus rule and compensate families of low income, by the decrease in its purchasing power, through direct aid.

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