Chile hikes interest rate surprise 150 bps, biggest in 20 years

By Anthony Esposito and Fabian Cambero

SANTIAGO (Reuters) - Chile's central bank enacted its largest interest rate hike in 20 years on Wednesday, lifting the benchmark rate by a larger than expected 150 basis points to 5.5% as it seeks to rein in stubbornly high inflation.

The central bank's board members voted unanimously for the move, according to a post-meeting statement.

"The evolution of inflation continues to face significant risks and their possible materialization becomes especially relevant in a context where both the annual change in the CPI and its outlook are already high", the central bank said.

Consumer prices in Chile jumped 7.2% in 2021, well above the central bank's target range of 2% to 4%.

The move, which topped forecasts for a hike to 5.25%, follows a rate increase in December to 4.0% from 2.75%, as the Andean country's economy rebounds strongly from the coronavirus pandemic and the government grapples with rising prices.

Central banks across the region have also been hiking rates to tame inflation. Brazil's central bank raised rates by 150 basis points in December and has signaled another such hike in February.

Mexico's central bank at its last meeting in December also stepped up its efforts to rein in surging inflation, raising its benchmark interest rate by 50 basis points to 5.5%.

(Graphic: Chile rate shock, https://graphics.reuters.com/CHILE-RATES/dwvkraelmpm/chart.png)

(Reporting by Anthony Esposito and Fabian Cambero; Editing by Sandra Maler and Rosalba O'Brien)

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Three of Australia's four major banks forecast another rate hike this year
• Behind the rhinestones, Dolly Parton built a business empire 
• Former JPMorgan executive Staley says he shared confidential bank information with Epstein