- Decision
- Maintain
- Rate change
- 0 bps
- Monetary policy rate
- 4.5%
The Board of the Central Bank of Chile left the monetary policy rate at 4.5 %, citing lower-than-expected inflation and domestic demand tracking projections against a backdrop of heightened global risks. After two 25 bp cuts since July 2025, when the rate stood at 5 %, domestic nominal yields have moved only marginally, narrowing spreads with the United States, while the peso has appreciated and bank credit remains broadly stable. December headline and core CPI eased to 3.5 % and 3.3 % y/y, with two-year inflation expectations anchored at 3 %; November Imacec contracted 0.6 % m/m (-0.5 % non-mining) but officials see the drag from services and transport as transitory, as high-frequency data point to consumption and investment expanding in line with forecasts amid unchanged unemployment and limited job creation. Externally, stronger US growth and higher copper prices have lifted Chile’s terms of trade, and improving emerging-market sentiment has buoyed regional equities and currencies even as geopolitical, fiscal and financial tensions cloud the global outlook. The Board will reassess the stance in the March Monetary Policy Report and reaffirmed its resolve to keep projected inflation at 3 % over the two-year horizon.
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.