(Bloomberg) -- Chile’s central bank held its benchmark interest rate at a record low as policy makers look past accelerating inflation and focus on an uneven economic recovery and a recent surge in coronavirus cases.

The bank’s board, led by its President Mario Marcel, kept the overnight rate unchanged at 0.5% on Tuesday. The decision was expected by all 11 analysts surveyed by Bloomberg.

Policy makers are keeping stimulus flowing amid lingering uncertainties over the recovery of one of Latin America’s richest nations. Greater government spending has helped economic activity hold up better than expected, and annual inflation is at the highest level in over a year, exceeding the 3% target. Still, virus cases neared a record again this month and the labor market has been slow to heal.

Read more: Chile Will Issue More Debt After $10.8 Billion in New Virus Aid

“Chile’s inflation rate is now well above the target, and the uptrend will continue over the next three months,” Andres Abadia, Chief Latin America Economist at Pantheon Macroeconomics, wrote in a note before the bank’s decision. “Rising political uncertainty, still-high unemployment and a huge output gap, however, will partially offset the upside inflation forces.”

Annual inflation sped up to 3.6% in May from 3.3% the month before, according to government data released earlier Tuesday. Part of the increase can be attributed to temporary base effects, with comparisons to the year-ago period when the first wave of the pandemic swept the country.

Chile’s recovery is being tested by a virus surge that’s overwhelmed hospitals and prompted the government to extend border closures through June. The slow pace of hiring is also weighing on the economic outlook, as the jobless rate has remained stuck in the double-digits for the past year.

Meanwhile, Chile is entering a period of high political uncertainty marked by the drafting of a new constitution and November’s presidential election.

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