- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 5%
The Board of the Central Bank of Chile kept the policy rate at 5.0 percent at its June 2025 meeting, citing lower headline and core inflation alongside stronger-than-expected activity and persistent external uncertainty stemming from trade tensions and the recent escalation of conflict in the Middle East. The rate has remained at 5 percent in every meeting since at least January 2025. Annual CPI eased to 4.4 percent in May, with core inflation at 3.6 percent, while two-year expectations in both the Economic Expectations Survey and the Financial Operators Survey are anchored at the 3 percent target; first-quarter output outperformed on export-linked sectors, domestic demand continued to expand, investment is expected to pick up after a weak start, and unemployment has risen despite strong wage growth. Copper prices have increased and oil prices have also moved higher, yet the peso and long-term yields are broadly unchanged and credit conditions show little variation. Against a global backdrop of softer US growth prospects and elevated price risks, the Board reiterates that, should the June Monetary Policy Report central scenario unfold, the policy rate will gradually converge toward its neutral range in coming quarters, with future moves guided by the outlook for inflation’s return to 3 percent 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.