What happens in the credit market in Chile is a normal behavior that occurs in situations where there is an increase in macroeconomic volatility. In situations of economic stress, correct their institutions risk diagnoses and seek more conservative positions. That is why tighter deadlines and reduce the amounts awarded. Additionally, despite the Central Bank has cut sharply its benchmark interest rate (reference rate is for other interest rates), Chilean banks have increased their spreads. This behavior corresponds to the increase in the risk premium that they perceive. If the actions of the Central Bank of Chile are not achieving the proposed objectives: Can you talk about errors in the conduct of monetary policy? One might think that the inefficiency that is having the Central Bank in achieving its goals (by mid-2008 was incapable of controlling inflation and at the moment can not do much to stimulate the economy), are due to errors in conducting monetary policy.
However, what is happening is that the tool that uses the Central Bank of Chile, is not having the desired effect because in situations like the current crisis, many factors impact negatively on the supply of credit. In this regard, so that monetary policy actually encourages domestic demand, should be complemented by direct measures to stimulate the generation of credit. In this sense, the end of March, the Chilean President Michelle Bachelet announced new economic stimulus measures that were mentioned among the facilities to access to bank financing (including measures to promote mortgage loans) and measures to increase competition in the sector (which includes increasing the capacity of insurance companies, which may provide more resources to the private sector). These measures designed to act directly on the credit market, along with others seeking to increase the competitiveness of Chilean firms, supplemented in the short term, the effectiveness of monetary policy in Chile, while in the medium and long term, strengthens the economy. Will these measures the expected impact in the immediate future? Latinforme. com is the main source of financial information and independent opinion on American and global markets from a Latin American perspective. From our offices in Buenos Aires, Argentina, I approached the latest news and alerts to help you make gains regardless of the direction taken by the market.