Santiago (Chile), September 8: Chile's economy will grow between 1.75 percent and 2.25 percent in 2022, and it will expand below its potential for several more quarters, given global inflationary pressure, the Central Bank of Chile projected Wednesday.
According to September's Monetary Policy Report, the bank also revised upwards the annual inflation forecast for 2022, from 10 percent in June to 12 percent this month.
It stated that "accumulated price volatility shocks and the recent depreciation of the peso" explain a large part of the correction.
Inflation is projected to decline in 2023 and reach the bank's 3-percent target range, with a lower rate of price increases than in previous months, in addition to a reduction in activity and demand for several quarters.
The Central Bank Council agreed on Tuesday, amid a divided vote, to raise the monetary policy interest rate to contain inflation for the 10th consecutive time, from 9.75 percent to 10.75 percent, the highest record since 1998.
According to official data, inflation stood at 13.1 percent annually in July, the highest in almost three decades, driven by food prices.
The report's projections incorporate a declining price rate in the coming months and an annual inflation that will start to decline next year.
"The risk of a much more persistent inflationary phenomenon is a concern for the council. If realized, it could lead to further monetary tightening," the report stated.
Source: Xinhua
