Chile May Start Tightening Process

While some analysts Chile to leave rates at 0.5% today, others believe tightening may begin. Barclays believes a 25bp hike could come today, with the policy rate reaching 6.25% by December 2012. On the other hand, Morgan Stanley forecasts that “with inflation so far well behaved, we suspect the central bank may choose to wait until June for further evidence of how fast the economy is rebounding from the dislocations caused by the earthquake.” It does say, however, that there is a risk of the tightening cycle beginning immediately.