Chile's economic expansion accelerated in the fourth quarter as shoppers stepped up spending, increasing the odds the central bank board will tighten monetary policy if growth doesn't cool this year.

The economy on a seasonally-adjusted basis expanded 1.2 percent in December from the previous month, the fastest gain in 2012 behind November's 1.3 percent increase, the bank said in a report posted on its website today. Chile's economy rose 4.7 percent in December from 2011, compared with the median estimate of 3.7 percent from analysts surveyed by Bloomberg.

December's growth brings expansion for the whole of last year in the world's top copper miner to 5.6 percent, according to calculations made by Bloomberg based on central bank data.

Policy makers would be forced to act if growth continues at its current rate and causes inflation to accelerate quickly, economist Sebastian Senzacqua said by phone from Santiago.

“Obviously the central bank could start to harden its message and perhaps we could see interest rates move toward the end of the year,” Senzacqua, investment analyst at Bice Inversiones, said today. “Still, in the short term there is no space to move the rate.”

Eoin Treacy's view While Australia is an obvious beneficiary of China's easing of financial regulations and easier monetary policy, as commodity exporters Latin American countries also stand to gain. Revenue from commodity exports will help fuel Brazil's infrastructure expansion and helped fuel consumer spending in Chile.

The Chile General Index has rallied impressively from the November lows to retest the 22,000 area and while overbought in the short term, a sustained move below the 200-day MA would be required to question medium-term scope for additional upside.

The Colombia General Index has also returned to rest an area of previous resistance near the October and May highs. It is also somewhat overbought in the short-term but a clear downward dynamic would be required to check momentum beyond a brief pause.

The Peru Lima General Index has been rangebound for two years and is currently testing the 22,000 area. A sustained move below the 200-day MA, currently near 21,000, would be required to question potential for some additional higher to lateral trading.

Mexico remains a regional leader but has become overextended relative to the 200-day MA following a 12-week rally. The first clear downward dynamic is likely to signal a reversion towards the mean is underway.