Higher inflation in Chile reflects multiple factors. Demand pressure has eased but remains high. Currency depreciation has offset falling global commodity prices and extended the tightening cycle. Inflation in 2022 is likely to remain above 10% y/y even with a more favorable sequential path in H2.

Indonesia has faced less pressure than other ASEAN countries. Favorable terms of trade and fiscal subsidies helped contain energy prices. Bank Indonesia can afford to be patient with hikes as core CPI remains moderate. Policy normalization through term structure and government bond sales, should help ease capital outflow pressures amid global tightening.