Inflation hits the target lower bound again
Chile’s CPI inflation for February hit 2.0% y/y, which is the lower bound of the 3% ± 1% target range. This month’s low inflation was driven by a large fall in food and beverage prices, while core prices stayed steady at 1.6% y/y.
We still think the central bank will keep rates on hold, as robust activity growth heats up the economy. However, we have reduced our 2018 inflation forecast to 2.6% from 2.7%, and if supply shocks persist, our rate forecast could change.