The Central Bank of Chile decided on Thursday to raise its interest rate by 25 basis points to 5.75%.
The increase follows a rise in annual inflation to more than 4%, which the central bank blames on copper, oil and food prices.
The central bank said the hike "is necessary for the rise in annual inflation of recent months to be truly transitory and for projected inflation in around two years time to stand at 3%."
The increase was expected. The central bank indicated after deciding to raise