Economy & Business - September 2021


CHILE | Monetary tightening continues. On 31 August, Chile’s central bank (BCCh) increased the benchmark interest rate by 75 basis points, doubling it to 1.5%. The decision was unanimously supported by members present at the BCCh’s monetary policy meeting. The BCCh cited external factors for this rate hike, such as the sustained economic recovery globally from the crisis caused by the coronavirus (Covid-19) pandemic, as well as risks of imbalances from rising inflation. “Idiosyncratic factors” also weighed on the BCCh’s decision, notably the high likelihood that Chileans will be authorised to make a fourth withdrawal from their pension funds, thus increasing liquidity and pushing up prices further. Chile’s annual inflation rate stood at 4.8% in August.     

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