Chile Seen Hiking Rates

The Chilean central bank is expected to raise its benchmark rate 50bp at its Thursday meeting, according to analysts, from 7.25%. “The market is calling for additional monetary action in Chile, since inflation stays at its highest point in at least the past decade,” the agency says. “There is a high probability that the central bank will hike again, not because it wants to follow the market’s desires, but because it still has a little room to move monetary conditions to a more neutral territory,” Moody’s adds. Goldman also predicts a 50bp hike, based on the dynamics of inflation in Chile. “Inflation is still a major issue and the central bank has shown a renewed commitment to control inflation,” says Alberto Ramos, analyst at Goldman. Further tightening is expected over the rest of the year, according to Lehman. “We consider that given the deterioration of the inflation scenario, much more stringent monetary conditions will be needed to make inflation converge to the target in the two-year horizon,” the shop says. “In our view, the current tightening cycle will bring the TPM rate to 8.50% by year end,” Lehman adds.