Macroeconomic Forecast Chile

BMI View: Chile's headline consumer price inflation rate ticked up to 0.9% year-on-year (y-o-y), the fastest rate since June last year. With the monthly inflation rate also picking, and supply and demand pressures brought about by the effects of February's earthquake continuing to intensify, we believe that inflation will continue to rise towards our end-2010 target of 3.6%. Alongside positive economic activity data, this is likely to push the central bank to begin hiking interest rates in the coming months. We are pencilling in 200 basis points of rate rises by year-end, taking the monetary policy rate to 2.50%.

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