The Monetary Policy Report released by Chile’s central bank today, following on from its 150bp rate increase to 7.00%, suggests that its tightening cycle is winding down to a close. However, we think that high inflation alongside Chile’s growing external vulnerabilities will still prompt an additional 200bp of rate hikes in this cycle, to 9.00%. That’s more tightening than the path implied by the central bank’s interest rate corridor as well as the latest analyst consensus.
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