Central Bank of Chile and Global Interdependence Center
0Past Performance Is Not Necessarily Indicative Of Future Results.
Is Monetary Policy Causing
Commodity Inflation?
Monetary Policy and Central Banking in the Post Crisis Environment
Santiago, Chile
Jan 17, 2011
US M2 vs CHINA M2
1Past Performance Is Not Necessarily Indicative Of Future Results.
10%
14%
18%
22%
26%
30%
1%
3%
5%
7%
9%
11%
Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
US M2 CHINA M2Nov 2010Sources: US Federal Reserve and The People’s Bank of China
CHINA YUAN IN US DOLLARS
2Past Performance Is Not Necessarily Indicative Of Future Results.
0.12
0.13
0.13
0.14
0.14
0.15
0.15
0.16
Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
Dec 2010Source: Bloomberg BGN
TOTAL PCE DEFLATOR VS CORE PCE DEFLATOR
3 MONTH AVERAGE %CH FROM 3 MONTH AVERAGE YEAR AGO
3Past Performance Is Not Necessarily Indicative Of Future Results.
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Jan-83 Jan-87 Jan-91 Jan-95 Jan-99 Jan-03 Jan-07 Jan-11
TOTAL CORENov-10Source: Bureau of Economic Analysis
FOOD CPI VS ENERGY CPI
3 MONTH AVERAGE %CH FROM 3 MONTH AVERAGE YEAR AGO
4Past Performance Is Not Necessarily Indicative Of Future Results.
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
Jan-82 Jan-86 Jan-90 Jan-94 Jan-98 Jan-02 Jan-06 Jan-10
ENERGY FOOD Nov-10Source: Bureau of Labor Statistics
TOTAL PCE DEFLATOR - CORE PCE DEFLATOR
3 MONTH AVERAGE %CH FROM 3 MONTH AVERAGE YEAR AGO
5Past Performance Is Not Necessarily Indicative Of Future Results.
-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
Jan-83 Jan-87 Jan-91 Jan-95 Jan-99 Jan-03 Jan-07 Jan-11
Nov-10Source: Bureau of Economic Analysis
GDP DEFLATOR VS CORE PCE DEFLATOR
CURR QUARTER %CH FROM YEAR AGO
6Past Performance Is Not Necessarily Indicative Of Future Results.
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10
GDP DEFLATOR CORE PCE DEFLATOR Q3 2010Source: Bureau of Economic Analysis
CRUDE OIL IN US$
Dollars per barrel
7Past Performance Is Not Necessarily Indicative Of Future Results.
20
40
60
80
100
120
140
160
1/6/2006 1/6/2007 1/6/2008 1/6/2009 1/6/2010
Dec-31-2010Source: Bloomberg
CORE CPI MEASURES
3 MONTH AVERAGE %CH FROM 3 MONTH AVERAGE YEAR AGO
8Past Performance Is Not Necessarily Indicative Of Future Results.
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10
CORE SERVICES CPI CORE CPI COMMODITIESSource: Bureau of Labor Statistics Nov-2010
US SINGLE FAMILY HOUSING STARTS VS US CAR SALES
MONTHLY, MILLIONS OF UNITS
9Past Performance Is Not Necessarily Indicative Of Future Results.
8
10
12
14
16
18
20
22
0.3
0.5
0.7
0.9
1.1
1.3
1.5
1.7
1.9
2.1
2.3
Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10
US Single Family Housing Starts US Car SalesNov-2010
Sources: US Census Bureau and Bureau of Economic Analysis
CORN IN US$
Dollars per bushel
10Past Performance Is Not Necessarily Indicative Of Future Results.
1.5
2.5
3.5
4.5
5.5
6.5
7.5
1/6/2006 1/6/2007 1/6/2008 1/6/2009 1/6/2010
Dec-31-2010Source: United Stated Department of Agriculture
GLOBAL GRAIN STOCKS: DAYS OF CONSUMPTION
11Past Performance Is Not Necessarily Indicative Of Future Results.
0
20
40
60
80
100
120
140
COARSE GRAINS WHEAT RICESources; Historical Data: USDA
10/11 Projection: McVean Trading & Investments
US PRODUCTION OF TOTAL RENEWABLE FUEL
Billions of Gallons
12Past Performance Is Not Necessarily Indicative Of Future Results.
3.00
8.00
13.00
18.00
23.00
28.00
33.00
38.00
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Actual through: 2010
Forecast through: 2022Source: US Department of Energy
CHINESE GDP
CURRENT QUARTER %CH FROM YEAR AGO
13Past Performance Is Not Necessarily Indicative Of Future Results.
0
5
10
15
20
25
30
Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10
REAL GDP NOMINAL GDP IN YUANSource: National Bureau of Statistics of China Q3 2010
CHINA TOTAL BANK LOANS VS CHINA M2
3 MONTH AVERAGE %CH FROM 3 MONTH AVERAGE YEAR AGO
14Past Performance Is Not Necessarily Indicative Of Future Results.
0%
5%
10%
15%
20%
25%
30%
35%
1/1/2000 1/1/2002 1/1/2004 1/1/2006 1/1/2008 1/1/2010
BANK LOANS M2 Nov 2010Sources: China Economic Information Network and The People’s Bank of China
CHINA EXPORTS VS IMPORTS
3 MONTH AVERAGE %CH FROM 3 MONTH AVERAGE YEAR AGO
15Past Performance Is Not Necessarily Indicative Of Future Results.
-40%
-20%
0%
20%
40%
60%
80%
Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
EXPORTS IMPORTS Dec-10Source: China Statistics Monthly
CHINA RAILROAD FREIGHT VS ELECTRICITY PRODUCION
3 MONTH AVERAGE %CH FROM 3 MONTH AVERAGE YEAR AGO
16Past Performance Is Not Necessarily Indicative Of Future Results.
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
1/1/2000 1/1/2002 1/1/2004 1/1/2006 1/1/2008 1/1/2010
RAIL ELECTRICITY PRODUCTIONOct 2010
Sources: China Economic Information Network
COPPER IN US$
Dollars per metric ton
17Past Performance Is Not Necessarily Indicative Of Future Results.
2000
3000
4000
5000
6000
7000
8000
9000
10000
1/6/2006 1/6/2007 1/6/2008 1/6/2009 1/6/2010
Dec-31-2010Source: London Metal Exchange
COTTON IN US$
Dollars per Pound
18Past Performance Is Not Necessarily Indicative Of Future Results.
40
60
80
100
120
140
160
1/6/2006 1/6/2007 1/6/2008 1/6/2009 1/6/2010
Dec-31-2010Source: United Stated Department of Agriculture
GOLD IN US$
Dollars per ounce
19Past Performance Is Not Necessarily Indicative Of Future Results.
400
600
800
1000
1200
1400
1600
1/6/2006 1/6/2007 1/6/2008 1/6/2009 1/6/2010
Dec-31-2010Source: Bloomberg BGN