- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 4.75%
The Board of the Central Bank of Chile left the monetary policy rate (MPR) unchanged at 4.75 % on 9 September, arguing that while headline inflation is falling as projected, unexpectedly sticky core inflation and lingering external uncertainties require “gathering more information” before resuming the path toward a neutral stance. After holding the rate at 5 % through June, the Board cut it by 25 bp in July to the current level. Domestic financial conditions are broadly stable, with the peso and market rates little changed and credit dynamics flat, while Q2 GDP expanded 0.4 % q/q (non-mining 0.1 %) and July’s Imacec rose 1.0 % m/m amid stronger investment and consumption; unemployment was 8.7 % and wages continued to rise robustly. Headline CPI keeps easing but core inflation is running higher than projected, and two-year inflation expectations in both the Economic Expectations Survey and Financial Traders Survey remain at the 3 % target. Externally, markets anticipate U.S. Federal Reserve rate cuts, global yields have fallen, the USD (DXY) stays soft, copper trades near USD 4.5/lb and oil has retreated to about USD 63/bbl. The Board reaffirmed its readiness to adjust policy flexibly to secure convergence of inflation to 3 % over the policy horizon and will monitor data closely before deciding on further MPR moves.
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.