Interest rates in Chile were left unchanged at 3.00% last night and despite the central bank adopting a relatively more hawkish tone than a couple of months ago in its statement accompanying the decision, we do not think that policy tightening is imminent. Inflation has been distorted by the effects of tax reform and temporary food price shocks, which are now starting to unwind. Even so, with relatively limited spare capacity in the economy, we do expect policy to start tightening next year.
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