The Chilean peso rallied after inflation jumped more than was forecast by economists, reducing probability of an interest rate cut by the nation’s central bank.

Chile’s consumer prices jumped 0.6 percent in December. That’s three times above the average forecast. Pablo Castro, an economist at Banco Santander Chile, said:

There is an almost zero probability that the central bank will cut rates in January. The central bank forecast was off by 50 basis points in just one month. That’s a warning signal that the bank will be more cautious in observing whether this inflation phenomena reverses or not.

USD/CLP closed at 510.4500 after opening at 510.8500.

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