Chile’s Back-to-Back Key Rate Shocks Hasten End to Stimulus

Chile’s central bank stunned economists with a bigger-than-expected interest rate hike for the second straight meeting and signaled it will remove stimulus even faster as inflation expectations soar above target.

Policy makers led by Mario Marcel lifted the overnight rate by 1.25 percentage points to 2.75% on Wednesday, surprising nearly all analysts in a Bloomberg survey who expected a smaller hike. In a statement, policy makers wrote borrowing costs will reach neutral - which is neither stimulative nor contractive - before their prior forecast of early 2022.