SANTIAGO, (Reuters) – Chile’s central banking revised Wednesday its economic forecast for 2022. It dropped to 1.0% to 2.0% after a December estimate of 1.5%-2.5%.

In a statement, the central bank declared that “The economy will grow at rates below its potential 2022 and 2023 with contractions of private consumption and investments.”

The central bank also predicted that inflation will reach 8.2% in the year ahead of its tolerance limit. This is higher than the previous 4.5% estimate.

The central bank stated that the recent increase in consumer prices was due to an “excessive amount of spending”, which was supported in part by COVID-19 stimulation programs.

The central bank increased its benchmark interest rate 150 basis points to 7.7% on Tuesday as it quickly retracted the monetary stimulus following the outbreak of the pandemic in February 2020.

The central bank stated that “The Monetary Policy Ratio (MPR), has risen quickly and significantly, but there are still risks of convergence” and added that inflation was a possibility.

The prediction was that inflation would “begin to converge towards the target in two years’ time” by the end of 2022.

According to the report, private consumption will decline and gross fixed capital creation will shrink over 2022-2023.

Also, the price for was adjusted to $4.35 per Pound. This is an increase from $4.05. Chile is the largest producer of copper in the world.