The Peruvian central bank’s decision to hike interest rates by 25bp for the third consecutive month, to 4.25%, as well as the more hawkish tone of the accompanying statement, point to concerns that price pressures are building. As a result, we have raised our end-2016 forecast for rates to 5.00% (from 4.50%). Meanwhile, in Chile, the risk is that rate hikes are delayed due to the weakness of the economy.
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