Central Bank of Chile

October 14, 2021

More central banks have reacted to the rise in inflationary risks. Late Wednesday came news from the Central Bank of Chile of a unanimously agreed greater-than-projected 125-basis point high in its policy interest rate. This move was the third recent hike following increases of 25 basis points in July and 75 bps at the end of August and puts the rate level at its highest since August 2019. CPI inflation in Chile has risen to 5.3%, a higher level than officials were assuming at the time of their previous tightening and associated with core inflation of 4.2%. The medium-term target of 3.0% is thus imperiled from being achieved within the forecast horizon, so officials are rushing to reestablish policy neutrality sooner than imagined earlier.

Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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