Chile's annual inflation quickens in September, backing rate-cut hiatus

By Aida Pelaez-Fernandez and Natalia A. Ramos Miranda

SANTIAGO, Oct 8 (Reuters) - Chile's annual inflation ramped up in September, the country's statistics agency INE said on Wednesday, breaking again above the central bank's target range and reinforcing expectations that the regulator will extend its interest rate-cut hiatus.

Annual inflation in the world's largest copper producer hit 4.4% last month, INE said, increasing from 4% in the previous month.

The latest inflation data supports an extension of the pause in rate cuts until the end of this year. "We believe that this result leaves room for a 25-basis-point cut at the December meeting," one analyst at Santander said in a note. Price pressures could reignite the central bank's caution on future borrowing costs, and some board members have already pointed to an increase in inflation risks, according to the minutes from its latest meeting. Chile's central bank, which targets inflation of between 2% and 4%, held its benchmark interest rate steady in September, as policymakers warned that sticky core inflation should be closely monitored. Consumer prices rose 0.4% on a monthly basis in September, the INE data showed, matching the consensus view in a Reuters poll of economists.

Nine of the 13 sectors surveyed recorded price surges in the month, as Chile celebrated national festivities that included some public holidays.

"The increases in the food and non-alcoholic beverage sectors stood out, as well as in recreation, sports, and culture," INE said in a statement. Traders expect the central bank's key interest rate to remain unchanged in October but to be cut to 4.25% by the end of 2025. (Reporting by Aida Pelaez-Fernandez and Natalia Ramos; Editing by Hugh Lawson and Paul Simao)