Chile’s annual inflation eased to 12,3% in January, but consumer prices rose well above forecast in the first month of 2023 January as the costs of food and beverages jumped, strengthening the central bank’s argument that it’s still too early to consider cuts to borrowing costs.
Chile's Central Bank Wednesday announced an increase of 50 basis points to the Monetary Policy Rate (TPM) which has been now set at 11.25% in a unanimous decision by the Board aimed at tackling inflation.
Inflation in Chile reached 0,9% in June, 7,1% in the first half of the year and 12,5% in the last twelve months, which is the highest since 28 years, in June 1994.
Private estimates fell short in Chile on Thursday when the Central Bank monetary policy desk announced an increase in the base rate of 125 points, to 8,25%, the highest since September 2008 in an effort to contain the strong sustained inflation. According to the bank's chair, Rosanna Costa the monetary policy desk decision was unanimous.
For a month that began under one president and finished under the new one, Chile's inflation for March of 2022 reached 1.9%, slightly above market projections of up to 1.4%.
Foreign Direct Investment, FDI, in Chile during the twelve months of 2021 reached US$ 16,782 billion, the best amount since 2015, according to the Central bank which added it represented a 95% increase over 2020. Overall it was 62% higher than the average of the last five years, and 16% above the 2003/2021 average.
The Chilean central bank hiked its reference rate from 4% to 5,5% to contain inflation which last year reached 7,2%, the highest in fourteen years. The Monetary Policy council of the bank on Wednesday agreed unanimously to increase the reference rate by 150 base points, according to the official release.
Given the latest spike of inflation in Chile which jumped 1,2% in September, the central bank council surprised markets by increasing the basic monetary lending rate 125 points, that is from 1,5% to 2,75%, the highest since 2001. The five-member Council decision was unanimous.
The Consumer Prices Index, CPI, in Chile climbed 0,4% during August totaling 3,2% so far this year and 4,8% in the last twelve months, according to the country's stats office. It is the highest since January 2016, and the tendency is to continue increasing, as had been anticipated by the Central Bank. Likewise with the US dollar.
The Monetary Council of the Chilean central bank surprised markets on Monday by deciding to increase the basic interest rate 75 base points to 1,5%, the highest jump since August 2001. According to a bank release, the decision from the council was unanimous, and well beyond market expectations that had estimated an increase of 25 to 50 base points.