Chile Central Bank President Marcel Sees Rates On Hold in 2021
(Bloomberg) -- Chilean central bank President Mario Marcel said he doesn’t anticipate a rate increase this year because the impact of the coronavirus pandemic on the economy isn’t over.
In an lengthy interview with the daily La Tercera, Marcel defended the bank’s decision to revise the nation’s growth expectations upward to 7% this year. Still, he said, the recovery would depend on the vaccine rollout, and that impacts of the pandemic will still be felt.
“The external environment has become much more favorable,” Marcel said. “And of course the vaccination process also helps. But I want to emphasize that the improvement in the growth projection for 2021 is not based only on the vaccination process, but has economic fundamentals, including a higher starting point than expected.”
Risks to the current projections include a longer period of virus restrictions and a longer recovery for investment and consumption, he said.
Marcel added that while inflation is a concern in other countries, Chile’s recent inflation has been dominated by price effects in volatile sectors like food and energy. He added that Chile will likely keep benchmark lending rates on hold until the end of the year to contain the economic effects of the pandemic.
“We must be clear that the crisis is not over and that the aftermath of an episode of this magnitude will be with us for a long time, which will require a lot of attention from public policies to try to minimize, above all, its social cost,” he said.
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