智利央行会议纪要偏鹰 加息押注升温Chile Rate-Hike Bets Build After Hawkish Central Bank Minutes

Chile investors are rapidly bringing forward bets on the country’s first interest rate hike since 2022 after the central bank highlighted risks from a surge in inflation pressures.

Following the monetary authority minutes released on Wednesday, markets began pricing in a near-certain quarter-point increase within three months, compared with about six months just a week ago. Three-month swap rates rose as much as eight basis points, while one-year rates climbed four basis points.

The shift reflects a growing sense that policymakers have less room to look through the current inflation shock, even as oil prices slumped in the wake of the US midterm elections. Higher energy and food prices and a weaker peso are threatening to spill over into other sectors of the economy, potentially outweighing concerns about sluggish domestic demand.

“Amid elevated spot inflation and increased cost pressures, the central bank has become notably less patient with inflation’s expected convergence to the 3% target,” Goldman Sach’s economist Sergio Armella wrote in a note. “The minutes suggest that there is a significant probability that the (central bank) could embark on a short hiking cycle.”Scotiabank said a report that it expects Chile’s central bank to raise its key rate by 25 basis points as soon as December and then by a similar amount in the first three months of 2027, taking borrowing costs to 5%.

Policymakers said in the minutes of its Oct. 27 meeting that it had considered raising rates by a quarter-point due to rising cost pressures, citing the risk that above-target inflation could become more persistent.

“There was agreement that this was a complex scenario, since once expectations and price-setting mechanisms began to become misaligned, the cost of restoring convergence could be considerably higher,” policymakers wrote in the document.

Investors reacted by bringing forward bets on a borrowing cost hike, while maintaining their estimates for where rates would peak. In fact, two-year swaps fell for a fifth consecutive session on Wednesday following the release of the minutes.

“Any hike would likely represent a preventive recalibration rather than the start of a significant tightening cycle, aimed at keeping inflation expectations anchored and avoiding a more forceful adjustment later,” Banco Itau Chile economists led by Andrés Pérez wrote in a note.

Oil prices tumbled for a third day Wednesday, dropping below $100 a barrel for the first time since early October, on mounting optimism for a negotiated exit to the war in the Middle East following the midterm elections.

Inflation expectations in the forwards market for Unidades de Fomento — an index-linked accounting unit — dipped in the past week after surging in the run up to the last central bank meeting. UF forwards show inflation topping out at 5.5% in February before falling below 4% in April. But that peak has eased from 5.7% just a week ago.

Bloomberg News reported Tuesday that Tehran and Washington were reviewing fresh proposals from mediators aimed at resolving their differences and averting a return to all-out war, with Qatari officials expecting feedback from both sides over the next day or so.

There is another, more pressing reason why the central bank will want to limit rate hikes, though. Chile’s economy has stagnated this year, with sluggish consumption and investment underscoring the fragility of domestic demand. Raising rates against that backdrop risks weighing further on activity.

The inflation shock remains externally driven, with no significant demand-side pressures at home, while weak investment is particularly vulnerable to higher interest rates, said Christopher Mejia, an emerging-market sovereign credit analyst at T Rowe Price.

“They will be making a mistake by increasing rates before economic activity starts to show signs of a recovery, particularly in investment,” Mejia said.