Resumen

FONTAINE, Juan Andrés. CONSECUENCIAS DE LA NOMINALIZACION DE LA POLITICA MONETARIA. Cuad. econ. [online]. 2002, vol.39, n.117, pp.253-275. ISSN 0717-6821.  http://dx.doi.org/10.4067/S0717-68212002011700007.

In August 2001, the Central Bank of Chile introduced the most relevant change in its monetary procedures since 1985. Such change is known as "the nominalization of monetary policy". Previously, the intermediate target for monetary policy _the overnight interbank interest rate_ was subjected to a monthly adjustment so as to keep it stable in UF terms. The UF is an unit of account that varies according to CPI inflation and is widely used in Chilean financial contracts with maturities of over 90 days. Yields on UF denominated instruments are generally considered to be real yields and thus Chilean monetary policy could be thought of as unique in the world in using a real interest rate as an intermediate target. Following international standards, the new procedure sets the nominal interest rate as the intermediate target. The nominalization of monetary policy initially creates important disturbances in financial markets and undermines an effective communication between monetary authorities and markets, an essential attribute of a good monetary policy. These effects stem from the UF being in Chile deeply rooted as the unit of account for real values. On time it these effects will probably gradually decrease as individuals come to conceive real values in terms of the expected price level. But such mutation is to take time and impose costs. It is not at all clear whether the long term benefits attributed to the nominalization of monetary policy -and the ultimate demise of the UF - outweigh the transition costs

Palabras clave : Monetary Policy; Interest Rate; Instruments.