The lower effective cost of imports has hitherto helped to tame inflation in Chile, although further dollar appreciation can be expected (two, three and five year swap rates all climbed to relatively new highs after the decision) as the $164bn economy expanded 7 percent in the third quarter year over year, its fastest pace since 2Q2005. Despite the fact that core CPI numbers came in below consensus (down 0.1 percent in October after rising 0.4 percent in September), and the country’s trade surplus hit a 22-month low, falling 88 percent to $214.9 million in October from $1.785 billion the month before, the central bank raised benchmark rates by a quarter-point (to 3 percent) for the sixth straight month this past week. Interestingly, though the peso has been the region’s strongest performer–up 14 percent since late June against the dollar–Chile has no plans to implement capital controls (such as Brazil’s 2 percent tax on inflows) to curb gains, per Finance Minister Felipe Larrain. “Capital is very smart,” he said. “You can say this short-term capital I don’t want, so they disguise it as long-term capital and they are really playing with the interest rate differential.” As an investment, the Chilean ETF (ECH) remains strongly correlated with the price of copper, which in turn follows the lead of the Shanghai index (China is the top consumer), argues trader Moise Levi. Using technical indicators (inverse head and shoulders; see graph left), he cites a close above 3150 on the Shanghai as a strong buy indicator on the metal.