- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 4.75%
The Board of the Central Bank of Chile unanimously kept the monetary policy rate (MPR) unchanged at 4.75 % at its 28 October meeting, judging that activity, demand and inflation are evolving broadly in line with the September Monetary Policy Report (IPoM) but that lingering external uncertainties and risks to the inflation outlook warrant further evidence before resuming the planned move toward the neutral rate range. After a 25 bp cut in July that brought the MPR to 4.75 %, the rate has been on hold at the September and now October meetings. No changes were announced to credit or liquidity operations. Annual headline and core CPI both eased to 4.4 % and 3.9 %, respectively, in September, with two-year inflation expectations at 3.0 % (EEE) and 3.1 % (EOF); August Imacec fell 0.7 % m/m but rose 0.5 % y/y, while investment in machinery and equipment appears to be strengthening amid mixed labour-market signals and flat credit conditions. The peso has appreciated alongside gains in local equities, helped by firmer copper prices and generally favourable global financial conditions, although oil prices remain volatile. Externally, the Federal Reserve’s recent rate cut, a U.S. government partial shutdown and persistent U.S.–China trade uncertainties frame the outlook. The Board reiterated that future MPR moves will depend on incoming data and confirmed its commitment to steer inflation 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.