Chile’s Finance Minister Signals Hard Economic Adjustments Are Nearly Done

Chile’s finance minister said the job of stabilizing the nation’s economy following a period of high inflation and overheated expansion is nearly complete as consumer price pressures wane, Bloomberg News reported. The annual inflation rate is about third of what it was a year ago and will continue declining to 4% in December, Mario Marcel said Wednesday in a Bloomberg Television interview from London, where he is meeting business executives as part of the Chile Day investors event. That consumer price level would be just above the central bank’s 3% target. “We started combining fiscal policy with monetary policy to stabilize the economy and that job is almost complete,” said Marcel, who’s a former Chilean central bank governor. “The adjustment has reflected mostly in stabilizing the level of GDP.” The Cambridge University-trained minister is now trying to guide Chile out of an economic slowdown that was engineered to rein in torrid demand and smother the fastest inflation since 1992. Its gross domestic product is expected to shrink this year, according to a Bloomberg survey, marking one of the worst performances in Latin America. He is getting help from the central bank, which has started the region’s most aggressive cycle of interest rate cuts after having lifted borrowing costs to the highest in over two decades. Read more.