Chile: Central Bank defies market expectations hiking rates again
May 12, 2011
At its latest monetary policy meeting on 12 May, the Central Bank raised the policy rate by 50 basis points to 5.00%, following a similar move at its previous meeting. The hike surprised the market, as analysts had seen the Bank slowing the pace of rate increases. According to the Bank, commodity prices have dropped substantially and concerns on financial risk in Europe persist. In addition, the Bank highlighted a reversal of private inflation expectations, which nonetheless remain above target. The next meeting is scheduled for 14 June. The Central Bank reiterated that it will continue to lift interest rates over the coming months, although the pace of increase will depend on inflationary expectations.