Chile’s Central Bank May Sell Dollars If Needed, Corbo Says

By Nathan Gill
     Oct. 16 (Bloomberg) — Chile’s former central bank President
Vittorio Corbo comments on the effect of the financial crisis on
Chile’s economic outlook. Corbo spoke to reporters after a
seminar in Santiago today.

On the possibility that the Chilean central bank will sell
dollars to increase the value of the peso:
     “The central bank will evaluate the possibility, but Mexico
has sold 10 percent of its reserves and its currency has devalued
more than Chile’s. In this case, it is extremely useful to be
flexible. At some point it could be convenient to use the
reserves. Given the evolution of the world economy, the bank may
decide that it has sufficient accumulations and that it could
sell part of what it has accumulated. If the bank thinks it
should use them now, it will consider it at some point. The
important thing is not to rush into these things, this is normal

On Chile’s country risk:
     “There is no risk, because Chile does not have debt.”

On Chile’s monetary policy:
     “The central bank is probably going to change its monetary
policy rate. It’s premature to talk about inflation estimates,
but I don’t think they will change what’s there very much, but it
will change. It’s a completely different outlook than what we
thought one month ago.”

On the impact of the financial crisis on Chile:
     “The financial crisis will affect Chile through exchange
terms, export volume, capital inflows, and financial prices.”

On Chile’s 2009 growth:
     “As a result of the pronounced deterioration of the
external environment, 2009 growth will be reduced significantly.
We will grow below our potential, 3.5 percent is very

On unemployment in Chile:
     “We will most probably see an effect on employment,
especially in an economy like Chile’s with a rigid labor market.
It’s hard to say by how much, the doctor is still examining how
much damage has been done, but there is no doubt that
unemployment will rise.”

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