Chile: nearing the end of the tightening cycle

The Monetary Policy Report released by Chile’s central bank today, following on from its larger-than-expected 100bp rate increase to 10.75% yesterday, suggests that its tightening cycle is drawing to a close. But with inflationary pressures still acute and the external position very fragile, we think the balance is tilted towards a final 50bp interest rate hike (to 11.25%) in October.

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