Chile’s central bank stepping on the brakes

The surprise 75bp interest rate hike by Chile’s central bank late on Tuesday (which took the policy rate to 1.50%) underscores policymakers’ concerns about the inflation outlook. Our forecasts for the policy rate had in any case been on the hawkish side, but we have revised up our end-21 forecast to 2.50% (from 1.50%) and our end-22 forecast to 4.00% (from 3.25%).

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