LatinNews Daily - 01 September 2021

In brief: Chile’s central bank doubles benchmark interest rate

* Chile’s central bank (BCCh) has increased the benchmark interest rate by 75 basis points to 1.5%, a decision taken unanimously by those present at the bank’s August monetary policy meeting (RPM). According to a BCCh press release, the decision to double the interest rate, which the local press highlights is the biggest increase since August 2001, was based on external factors such as expectations of a sustained global economic recovery as well as the need to “avoid the accumulation of macroeconomic imbalances that could cause a more persistent increase in inflation”. It also cited “idiosyncratic factors” such as the potential for new withdrawals by Chileans from their pension funds. In July Chile’s consumer prices increased 0.8% compared with the previous month, above expectations, while the annual inflation rate hit 4.5%, above the BCCh’s target of 3% (with a tolerance range of 1 percentage point above or below).

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