- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 5%
The Board of the Central Bank of Chile unanimously kept the monetary policy rate at 5 %, citing a more dynamic-than-expected economy alongside still-elevated inflation risks and a sharp rise in global uncertainty linked to escalating US trade measures and geopolitical tensions. After also holding the rate at 5 % in January, the Bank sees domestic activity buoyed by stronger exports, agriculture and tourism, with private consumption and investment edging higher, employment improving at the margin and real wage growth remaining above its decade average; business and household sentiment has firmed and large-project investment intentions have risen. February headline and core inflation ran at 4.7 % and 3.9 % y/y respectively, while two-year inflation expectations continue to sit above the 3 % target. Local bond yields have fallen, the peso has appreciated around 7 % and the IPSA gained roughly 6 %, helped by an 8 % rise in copper prices and a 9 % drop in oil as the global dollar weakened. The Board reiterated that significant inflationary risks warrant caution and pledged to adjust the policy rate as needed to ensure inflation converges to 3 % 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.