Fynsa
When there is evidence of abnormal behavior abnormal behavior such as, for example, a symptom of a disease, the fact that the data appear normal is, rightly, abnormal.. I stole the phrase from Gregory Housewho meant that blood tests, X-rays, MRIs, etc., that showed nothing unusual, in a pathological context, were just proof that something was wrong: "normal is not normal".. So that I never forget that, I have a magnet with that phrase stuck on the refrigerator. Seriously.
I bring up this sentence because it was what most caught my attention with respect to the latest Monetary Policy Meeting Minutes. Let us recall that on that occasion, the Board decided to raise the rate by 75 basis points to 9.75%, the highest level since the last meeting. to raise the rate by 75 basis points, leaving it at 9.75%, the highest level since the nominalization of monetary policy in the early 2000s.. Our analysis considered that a much higher TPMR would not necessarily do much for inflationary levels, since a large part (if not all) of the current price variation was explained by the current price variation was explained by external or supply-side factors, against which the literatureThe literature tells us that there is little or no effect of using monetary policy. Being from an eminently transitory source, there is nothing left for us to do but to "see this inflation through", take care that expectations do not become unanchored and hope that there are no second round effects. That is normal.
However, what the Central Bank tells us on this occasion is that normal is not normal. Moreover, it mentions that the Chilean Chilean economy is at such a level of maladjustment that its behavior cannot be what it is accustomed to in this type of situation. Although we may have certain reservations with this diagnosis, it is difficult not to agree with the answer it supposes. This is basically the the explanation to justify for having changed the bias of the statement, for having made an increase at the high end of the market estimates and, furthermore, for suggesting again that additional increases will be necessary in the coming months.
The above explanation does not exclude that this conclusion could hardly be drawn with only one additional month of data, since the mismatches have been present for quite some time. the mismatches have been present for quite some time and, with the same information and, with the same information, it had been said that the upward cycle was about to end. In short, more evidence that what is normal today is not normal.
So what's next? Nothing very different from what we projected after the decision: further increases will be made, at the September and October meeting, to leave the MPR at 11%, which today is the high end of the corridor.which today is the high end of the corridor. A level that once seemed crazy to us, representing the most contractionary rate of the last decades (yes, more than that of the Asian crisis), in a global and national context that is far from normal. But who knows...
