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Inflation in Mexico decelerates rapidly in November

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Central Bank of Chile sees greater contraction and higher inflation

(Bloomberg) – The Central Bank of Chile increased its projection for an economic contraction this year, as the rebound after the worst moment of the pandemic was weaker than expected, especially in the construction and services sectors. Gross will drop between 5.75% and 6.25%, compared to the previous estimate of 4.5% to 5.5%, according to the quarterly Monetary Policy Report (IPoM) released on Wednesday. Policymakers raised their estimate for year-end inflation from 2.4% to 2.8%, after early withdrawal of pension savings increased consumer demand. “In Chile, despite the fact that contagions have decreased and mobility has increased compared to mid-year, the improvements in activity have been slower than expected in September, “the central bank indicated. The report comes after the central bank maintained its benchmark interest rate at a record low of 0.5% amid weak economic recovery. In addition, the outlook for the fourth quarter was affected this week when the government announced that it would tighten restrictions due to the coronavirus in the capital, Santiago. The bank noted that domestic demand will plummet 9.1% this year, compared to its previous estimate of a 7.1% contraction. Policymakers also raised their forecast of a 2020 investment drop from 10 , 6% to 13%. However, the bank is more optimistic for next year, as it expects GDP to increase between 5.5% and 6.5%, compared to its previous estimate of between 4% and 5% . Copper prices have recovered, boosting exports, while pension withdrawals have already increased retail sales compared to the previous year. Chileans are expected to withdraw up to $ 19 billion from their pension savings after Congress approved last week a second bill that will allow early withdrawals. A similar bill passed in July injected more than $ 17 billion from pension funds into the economy. The additional money led to an increase in retail sales of nearly 20% in October, fueling inflation concerns across the board. short term. Financial traders surveyed by the central bank raised their projections for the December CPI to 0.2% from 0% in the previous survey, while 1-year inflationary offsets rose last week to 3.3% compared to 2.8% from a month ago Original Note: Chile Central Bank Sees Deeper Downturn and Faster InflationFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source. © 2020 Bloomberg LP

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