Chile: Footing the earthquake bill
Central bank boss calm about effects of reconstruction; Funding will come from range of sources
"Despite the earthquake, I don’t believe the monetary policy path will deviate much from my original plan"
José de Gregorio, central bank governor of Chile
José de Gregorio, the president of Chile’s central bank, is confident that his country will not suffer macroeconomic consequences despite being hit by an 8.8 magnitude earthquake on February 27. "Despite the earthquake, I don’t believe the monetary policy path will deviate much from my original plan last year," he says in an interview with Euromoney. "Rates will stay low this year. Inflation will spike in March because consumer goods have been limited for a month but this spike will decline rapidly, leaving only a marginal increase in inflation for 2010 overall. The market is adjusting its growth expectations down by 0.5%. However, market commentators are also adjusting their 2011 predictions up by 0.5% on the back of reconstruction activity so overall the macro outlook is almost the same as before the earthquake. Therefore I conclude that the monetary policy route won’t be excessively different from what we were planning anyway."