- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy interest rate
- 5%
The Board of the Central Bank of Chile unanimously left the monetary policy rate at 5 % at its 29 April meeting, judging that while headline inflation held at a still-high 4.9 % y/y in March and core eased to 3.7 %, the path toward the 3 % two-year target remains on track but warrants “caution” amid heightened global uncertainty and softer domestic demand. Having kept the rate unchanged at 5 % since at least January, the central bank noted that early-April U.S. tariff moves and wider geopolitical strains have darkened the world growth outlook, lifted U.S. long-bond yields and inflation prospects, and fuelled sharp bursts of market volatility. Locally, however, financial conditions have eased: short- and long-term interest rates have fallen, the peso has appreciated and equities have risen, while credit volumes are broadly flat and survey data still point to weak loan demand. Activity indicators signal firmer momentum driven by export-linked sectors despite a February Imacec dip of 0.1 % y/y, and labour market slack remains limited. The Council will continue to adjust the policy rate as needed to secure inflation’s convergence to 3 % over the policy horizon, reiterating its commitment to a flexible approach.
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.