Understanding Key Economic and Financial Terms

Countercyclical Policy

Fiscal or monetary policy designed to mitigate the intensity of the economic cycle, contributing to the stability of output and employment.

Absolute Price

The price of a good, service, activity, or service factor in terms of monetary units.

Real Price

The price of goods, services, activities, or services in relation to a factor, an index that has a basket of goods and services, such as the CPI.

On Price

Price expressing the ratio of exchange of goods, a service, or an asset factor in terms of another good.

Projection

Estimating the value a variable will have in the future, based on informal procedures or formal models, conditional on available information.

Basis Points (bp)

A hundredth of a percentage point. Example: an increase of the interest rate from 6.00% to 6.01%.

Target Range

Refers to the expected variability of inflation around the target that the central bank considers valuable and frequently observed.

Technical Reserves

Lace by total deposits exceeding 2.5 times its capital.

International Reserves

Foreign currency liquid assets maintained by the BCCH (Central Bank of Chile). It is a tool to support monetary and exchange rate policy in meeting the goal of ensuring the stability of the currency and the normal functioning of internal and external payments.

Nominal Rigidities

Inflexibility of some prices of goods, services, and labor, usually downward, hindering the efficient allocation of resources in the economy.

Deposit Insurance

Insurance to cover a percentage of bank deposits, with a cap, against the risk of loss due to insolvency or liquidity of the bank receiving deposits.

Shock or Disruption

A sudden and unpredictable change in the conditions of a particular market or variable, internal or external, and whose effects extend to the rest of the economy. Can be negative or positive.

Stock or Acquis

The amount of any monetary or financial assets, goods, capital, or other property accumulated at a given time.

Interbank Rate

The interest rate charged by banks in their lending operations reciprocal.

Unidad de Fomento (UF)

Corresponds to an adjustment system for credit transactions in national currency authorized by the BCCH. The value of the UF is adjusted from the 10th of each month until the 9th of the next month, daily, the geometric average for the variation that has experienced the Consumer Price Index (CPI).

Nominal Variable

Variable as current monetary units.

Volatility

The degree of dispersion in one direction or another that has the value of a variable in a given period.