Chile: tightening cycle will go further than most expect

The guidance in the Monetary Policy Report released by Chile’s central bank today, following on from its 75bp rate hike to 9.00% yesterday, suggests that the tightening cycle has a little further to run. We think that double digit inflation alongside Chile’s growing external vulnerabilities will prompt an additional 100bp of rate hikes in this cycle, to 10.00%. Our view is more hawkish than the path currently priced in to financial markets and the latest analyst consensus.

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