Inflation in Chile has continued to escalate, hitting its highest level in decades. The main factor behind this trend is still the major increase in demand during 2021. In recent months, however, the impact of strong global cost pressures has deepened due to higher commodity, energy, and food prices. This occurs in a scenario where difficulties in global distribution chains have continued, the peso remains depreciated, and the activity gap is still positive. The short-term inflation outlook has risen considerably, responding to this combination of factors. In line with expectations, economic activity began to adjust in the first quarter, despite a demand composition where private consumption remains intense while investment is dwindling. In the medium term, the adjustment of macroeconomic imbalances remains the central element for inflation to converge to 3% within two years. The high level of inflation and the greater persistence of its fundamentals have called for a more contractionary monetary policy to achieve such convergence, which has led the Board to raise the MPR to 9%. The Board estimates that to ensure the convergence of inflation to 3% within the two-year horizon, additional adjustments to the MPR will be needed, although smaller in magnitude. Risks remain high, nonetheless, particularly given the high level and stubborn persistence of inflation.