Further tightening to come in Chile & Peru

Last night’s decision to raise Chilean interest rates by 50bps to 5% surprised the markets but was in line with our forecast. By contrast, the decision to raise Peruvian interest rates by 25bps was widely anticipated. Interest rates in both countries are now at two-year highs, but with inflation set to rise further over the coming quarters, policymakers still have more work to do.

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