Chilean Financial Market Forecasts 2.5 Percent Economic Growth

Consumer prices are expected to see a 5.3 percent rise in the coming 11 months, and close 2023 with an annual inflation of 5 percent, Chile's central bank said.

The benchmark interest rate is expected to remain at 11.25 percent at the end of this year and decline to 7 percent by December 2023.

At its latest meeting, the central bank ruled out hiking the rate again after the rate was increased from 10.75 percent to 11.25 percent in October and reached its highest level since 1998.

According to government data, Chile's inflation rate rose to its highest level in three decades to hit 13.3 percent in November due to soaring food prices.

While inflation is far from the target range of 3 percent, the Finance Ministry said the economy is "adjusting" following the macroeconomic imbalances caused by the pandemic, and is resuming its path of growth.

The central bank also upgraded its growth forecast for 2022 to 2.4 percent, but downgraded it for 2023 to between 1.75 percent and 0.75 percent, while expecting it to bounce back in 2024 to between 2 percent and 3 percent.

Inflation will not return to the target range of 3 percent until 2024, a forecast that "is still subject to risk" given the global economic scenario, the bank said.

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