Chile Nominates Joaquin Vial as Central Bank Board Member
Chile’s government nominated Joaquin Vial, head of South American research at Banco Bilbao Vizcaya Argentaria SA, to the central bank’s board as policy makers decide whether last week’s interest rate cut will be a one-time or the start of a trend.
Vial, whose appointment needs to be approved by Congress, will take the place of former central bank President Jose De Gregorio, who stepped down in December, Finance Minister Felipe Larrain told reporters in Santiago today. De Gregorio was replaced as bank president by board member Rodrigo Vergara.
The government wants Vial to be in place as the fifth board member by the next interest-rate decision on Feb. 14. Vial may be less inclined to back further rate reductions after inflation accelerated in December to the fastest pace since April 2009, said, Alfredo Coutino, Latin America director at Moody’s Analytics.
“He’s more of a hawkish economist,” Coutino, who has been friends with Vial since the 1990s, said by phone from West Chester, Pennsylvania. “He is going to strengthen the management of monetary policy in Chile in terms of being consistent with the inflation target.”
Policy makers unexpectedly reduced borrowing costs last week for the first time since 2009, even after inflation reached 4.4 percent, breaching the central bank target of 2 percent to 4 percent.
A surge in the price of copper, Chile’s largest export, has caused some traders to doubt whether policy makers will cut rates again in February, Jose Miguel Gredilla, a swaps trader at Banco Santander Chile in Santiago, said today.
Rising Yields
Six-month interest rate swaps, which reflect traders’ views of average borrowing costs, rose six basis points to 4.67 percent at 2:35 p.m. Santiago time, the biggest increase in two weeks.
Vial has a PhD in economics from the University of Pennsylvania and was budget director in the government of President Eduardo Frei Ruiz-Tagle from 1997 to 2000. He was later chairman of BBVA’s Chilean pension fund AFP Provida SA, where he oversaw about $40 billion in assets.
“Joaquin Vial is a professional with an outstanding background,” Larrain said. “He is an independent professional with all the characteristics needed to make an enormous contribution to the central bank board.”
To contact the reporters on this story: Randall Woods in Santiago at rwoods13@bloomberg.net; Sebastian Boyd in Santiago at sboyd9@bloomberg.net
To contact the editors responsible for this story: Philip Sanders at psanders@bloomberg.net; Joshua Goodman at jgoodman19@bloomberg.net
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