Chile: Central Bank continues to hike rates sharply in March
At its 29 March meeting, the board of the Central Bank of Chile decided to hike the monetary policy rate by 150 basis points to 7.00%. The move followed a 150 basis-point hike in January.
The Bank’s decision was driven by a desire to keep inflation and inflation expectations in check. Inflation rose further above the Bank’s 3.0% target in February, and the war in Ukraine could further inflame price pressures ahead. The Bank revised up its own forecasts as a result, and now expects inflation of close to 10% by the middle of the year. Moreover, the Bank highlighted that market inflation expectations remained above the target over a two-year horizon.
In its communiqué, the Central Bank stated that the policy rate was likely to continue to rise in the near term. However, the Bank softened its language somewhat, stating that “future increases in the MPR would be smaller than those of recent quarters.” The Consensus is for several more rate hikes before the end of the year.