- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 5%
The Board of the Central Bank of Chile unanimously left the policy rate unchanged at 5 %, citing a broadly in-line macro scenario but higher upside risks to inflation that warrant “caution”. It noted that December headline and core CPI quickened to 4.5 % and 4.3 % y/y, respectively, with recent price dynamics driven by peso depreciation, rising labour costs and higher electricity tariffs; two-year inflation expectations stand at 3 % in the Economic Expectations Survey but 3.5 % in the Financial Traders Survey. Activity surprised slightly on the upside as November Imacec grew 0.3 % m/m (2.1 % y/y), wholesale and retail trade improved, yet employment creation remained weak and the seasonally-adjusted jobless rate stayed near 8.5 %, while wage growth stayed high and bank credit remained sluggish, especially to firms. Externally, the Bank highlighted heightened global uncertainty, firmer long-term yields, a stronger USD, and recent increases of about 3.5 % in copper and 6 % in oil since December; the peso has depreciated in line with global currency moves. The Council reiterated it will adjust the monetary policy rate flexibly, monitoring incoming data to secure a return of inflation to the 3 % target within two years.
Rate evolution
From June 2025 to September 2026, the Central Bank of Chile lowered the policy rate by 50 basis points from 5.0% to 4.5%, with a July cut, holds through October, a further reduction in December and then no change through September 2026. The initial easing reflected declining headline and core inflation, inflation expectations anchored at 3% and a view that earlier upside inflation risks had moderated despite firmer-than-expected activity and domestic demand, slow job creation, strong wage growth and persistent external uncertainty, while the September-October pause came as core inflation proved higher and more persistent than expected.
Since December, when faster-than-expected disinflation and reduced convergence risks justified another cut, the Board has kept the rate at 4.5%, initially citing lower near-term inflation and later stressing that the conflict in the Middle East, higher oil prices and CLP depreciation were lifting short-term inflation and uncertainty. On 28 July 2026, it held the rate as renewed attacks following the June ceasefire pushed oil prices back to around USD 100 per barrel before a moderation, while activity and investment were weaker than projected, unemployment rose, June headline inflation reached 4.3% and core inflation 3.4%, and two-year inflation expectations remained at 3%.
On 8 September 2026, the Board unanimously held the rate at 4.5% as renewed escalation between the United States and Iran brought oil prices close to USD 100 per barrel, while the domestic economy remained weak through the second quarter and early third quarter, domestic demand slowed, jobs declined and unemployment increased. Annual headline inflation rose to 4.1% in August, driven by volatile components, while core inflation stood at 3.3% and two-year expectations remained at 3%, leading the Board to retain a meeting-by-meeting approach amid heightened external risks and the possibility that domestic weakness could persist.