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Illustration: Sarah Grillo/Axios

Chile’s central bank became the latest in Latin America to hike interest rates this week, startling markets with a decision to double its overnight rate.

Why it matters: Inflation has been running high in parts of Latin America. And central bankers across the region don’t have the luxury of maintaining a “looser for longer” monetary policy the way the Fed and the ECB do.

  • That’s because many Latin American countries have a more traumatic past when it comes to runaway inflation — so they’re often quick to act on rising prices, Alonso Cervera, chief economist for Latin America at Credit Suisse, tells Axios.

What's happening: Chile’s central bank hiked its key rate to 1.5%, from 0.75% — and said it expects to keep on hiking all the way to 3.5% within the next six months.

  • This, after saying in June that rates would likely end the year at 1.25%.
  • Chile’s move was driven by expectations for inflation of 5.7% this year, and a forecast that 2021 GDP growth will heat up by as much as 11.5%.

The big picture: Mexico, Brazil and Peru have all raised rates in the last few months. And Colombia's central bankers have also hinted that they may need to begin a tightening policy.

  • Many of the recent rate-hikers don't have nearly the growth expectations of Chile — but are experiencing inflation, Cervera says.

What to watch: Besides the next round of inflation data and central bank meetings — upcoming elections.

  • That's because even as central banks seek to pull back from pandemic-era support, social spending demands on the part of the public may intensify — because COVID's impact on jobs and poverty has lingered, Michael Arno, associate portfolio manager at Brandywine Global, tells Axios.
  • The Chilean general election will take place in November, followed by Colombia in May and Brazil in October 2022, he notes.

Go deeper

Kate Marino, author of Markets
Dec 10, 2021 - Economy & Business

Economist group touts Build Back Better as inflation offset

Illustration: Annelise Capossela/Axios

With inflation numbers expected to come out hot this morning, a group of 56 economists says President Biden’s Build Back Better Act would counteract the impact of rising prices on Americans’ wallets.

Driving the news: The economists signed a letter, released Friday morning in conjunction with left-leaning advocacy group Invest in America Action, urging Congress to pass the social spending plan swiftly, in order to get the ball rolling on programs that will lower costs for essentials like child care, health care and education.

Inflation hits highest level in nearly 40 years

Source: U.S. Bureau of Labor Statistics; Chart: Axios Visuals

The core Consumer Price Index, the measure of the price of goods and services excluding food and energy, increased 0.5% in November, according to data released Friday.

Driving the news: The headline CPI figure, which measures the price of all items, rose 6.8% over the last 12 months, marking the biggest jump in 39 years.

1 hour ago - Sports

Robot umpires inch closer to calling MLB games

The Automated Ball-Strike system (ABS), the tech powering what's colloquially known as robo-umps, is inching ever closer to the big leagues.

Driving the news: The independent Atlantic League — which has partnered with MLB since 2019 — last week announced it was doing away with robo-umps after testing them for the past season-and-a-half.