Chilean central bank surprises markets with a larger rate hike

Central Bank of Chile
Photo: Central Bank of Chile/Flickr

The Central Bank of Chile’s board unanimously increased its policy rates by 125 basis points to 8.25% on May 5, surprising many observers.

In its two previous monetary policy meetings in January and March the board increased rates by 150bp.

Many observers forecast the central bank would implement a 100bp increase in May.

Nonetheless, persistently higher inflation is compelling Chilean officials to continue with the very sharp tightening cycle they initiated in 2021. In June 2021 the central

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