Chile's central bank raised the country's benchmark interest rate to 8.25% on Thursday (5/5) from 7% previously. The increase in interest rates was above expectations.
Bank board members voted unanimously for a 125 basis point increase, the central bank said in a statement. The central bank took this decision amid efforts by authorities around the world to tighten monetary policy to keep inflation at a very high level.
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Analysts polled by Reuters expect the central bank to raise interest rates to 8%.
The latest move follows a series of rate hikes by banks since the middle of last year to curb inflation. The Andean copper-producing economy has bounced back strongly from the effects of the coronavirus pandemic.
Chile's consumer prices skyrocketed 1.9% in March which was the highest monthly gain in nearly 30 years. The annual inflation rate is around 9.4%, the highest since 2008 and underscores the challenges for authorities as they battle inflation exacerbated by rising global commodity costs.
Monetary policy authorities around the world, from the US Federal Reserve and the Bank of England, to the Bank of Mexico and Brazil's central bank, have also raised interest rates to their highest levels in years as inflationary pressures have become a global phenomenon.
"World inflation continues to rise, and central banks have intensified their withdrawal of monetary stimulus," Chile's central bank said in a statement.
"This is happening in a scenario where commodity and food prices remain high and restrictions in China have put additional pressure on the recovery of global supply chains," the Chilean central bank said.
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