Chile Hikes More Than Expected

Chile’s central bank tightened the monetary policy rate by 50bp to 1.00%, saying that the immediate effects of the earthquake dissipated quickly and the economy continued to recuperate. Given the strong economic activity figure combined with the increase in inflation after months of deflationary readings, Bulltick had moved its expectations for the start of the tightening process with a rate hike of 25bp in June rather than holding until July. Morgan Stanley also believed Chile’s central bank was likely to start its policy normalization process this month with a 25bp hike after keeping its target rate at a record-low level of 0.50% since July of last year as growth quickly rebounded after March’s brief earthquake-linked dip.