The more cautious tone of the Monetary Policy Report released by Chile’s central bank today confirms that policymakers have been spooked by the inflation surprises at the start of the year and has prompted us to nudge up our year-end rate forecast to 4.50% (from 4.25% previously). That said, this still implies that rates will fall back towards neutral this year, making Chile the only major economy in the region where that’s the case.
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