A survey of financial operators in Chile anticipates that the aggressive policy of the country's central bank to combat rising prices will continue to hike interest rates, anticipating the basic rate from the bank's Monetary Policy office will be reaching 8% by next May.
Consumer prices in Chile increased 1,21% in January from the previous month, December's 0,78%, which meant that the twelve month inflation in the first month of the year reached 7,7% compared to 7,2% in December. This is the highest rate of inflation since November 2008 and well above the central bank's target of 3%.
Financial operators estimate that inflation will remain strong during the first quarter of 2022, and were not surprised when the central bank's Monetary Policy decided on a 150 basis point increase in the reference rate, taking it to 2,75%. They also anticipate two strong consecutive hikes in the near future, some 150 basis points each time, reaching 7%, plus a 100 basis point in May, thus the reference rate at 8%, the highest in Chile since 2009.
The survey indicates that the 8% reference rate could remain well into March 2023.
As to the Consumer Prices index for the coming months operators estimate 0,6% in February, 0,8% in March and 0,5% in April, meaning inflation for the next twelve months will still be above the bank's target.
Inflation in January was boosted by global supply problems, the increase in most items including food and fuel, both over 2% and the 50 billion dollars injected into the economy as a result of the Chilean government support measures during the pandemic.