The CPI in Chile surprised expectations and market pricing to the upside with headline inflation printing at 0.5% MoM and 4.0% YoY (expectation: 0.4% MoM, 3.8% YoY | Market 0.33% MoM). This brings the rebased headline annualised print to 3.5% from 3.2%, and the 2Q24 projection from the BCCh is 3.7% (in the rebased series). The CPI Ex-Volatiles slowed to 0.54% MoM from 0.63% MoM (just below the 80th percentile), lowering the annualised figure to 3.53% from 3.66%. This is the key measure used by BCCh policy makers and core inflation printed at 0.3% (2.57% YoY). Most of the other main contributions were from food and beverage items. As such, although this is a rather hawkish headline print, it was largely driven by non-core items so we still see the BCCh cutting rates by 50bp at its next meeting on 23 May. We expect the market to react hawkishly and the CLP to see some strengthening on higher front-end rates, although we note the role of tradables driving the volatility in the print and this move could thus be susceptible to a reversal.