Chile Monetary Policy May 2022


Chile: Central Bank continues to hike aggressively in May

May 5, 2022

At its 5 May meeting, the board of the Central Bank of Chile (CBC) decided to hike the monetary policy rate by 125 basis points to 8.25%. The move followed a 150 basis-point hike in March.

The Bank’s decision was driven by a desire to rein in inflation and inflation expectations. Inflation in March significantly overshot the Bank’s estimations and rose further above its 3.0% target, with core price pressures also intensifying. Moreover, the Bank highlighted that market inflation expectations remained above the target over a two-year horizon. On the flipside, the CBC expects economic activity growth to have slightly exceeded its forecast for Q1, providing some leeway to keep hiking.

In its communiqué, the Central Bank did not provide explicit forward guidance, stating that it would reassess the interest rate path in its Monetary Policy Report scheduled for June. Given that inflation and core inflation continued to surge in April and that the international price environment remains unfavorable, further tightening is likely going forward.

On the outlook, Gemines’ Alejandro Fernández Beroš said:

“The Central Bank has to define in the next two monetary policy meetings, in June and July, how far it wants to raise the MPR from 8.25% today. My estimate is that it will rise by 75 basis points in June and by 50 basis points in July, with a range of 100 to 150 basis points in total, to keep the MPR at that level until the end of the year.”


Our panelists are taking the Bank’s latest move into account, with a new Consensus to be published on 17 May.

Author:, Economist

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Chile Monetary Policy Chart

Chile Monetary Policy May 2022 1

Note: Policy rate in %.
Source: Central Bank of Chile.

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