SANTIAGO – Chile’s Central bank on Monday elevated its forecast for inflation this year from 2.8 percent to 3.6 percent.
The estimate is included in the first Monetary Policy Report of 2015, presented to the Senate finance committee by bank chief Rodrigo Vergara.
“In the baseline scenario, the CPI (consumer price index) will continue converging on the target (range of 2 percent-4 percent), but it will remain above 4 percent on an annual basis for a few more months to approach 3 percent in 2016,” the report says.
Inflation “has been greatly influenced by a depreciation of the Chilean currency, which has been deeper and more persistent than previously estimated,” the Central Bank said.
Regarding gross domestic product, the Central Bank maintained its December estimate of 2.5 percent to 3.5 percent growth in 2015, but noted that expansion will remain below the medium-term projection of between 4 percent and 4.5 percent.
Improving terms of trade and the peso’s continuing decline against the dollar will continue to aid export-oriented sectors, while the fall in fuel prices is expected to reduce business costs and bolster net household income.
The Bank also pointed to its expansionary monetary policy and plans for large public investment as factors promoting economic growth.