- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 4.5%
The Board of the Central Bank of Chile unanimously kept the monetary policy rate at 4.5 %, citing heightened global uncertainty and a surge in oil prices towards USD 100 per barrel after the war in the Middle East, which is expected to raise inflation and weigh on activity. The rate has been unchanged since a 25 bp cut in December 2025. Reflecting tighter global conditions, Chile’s peso has depreciated, local bond yields have risen and equities have retreated. At home, GDP expanded by 2.5 % in 2025, but January’s Imacec undershot expectations, while private consumption stayed firm and investment was supported by mining and energy projects amid steady unemployment. February headline CPI slowed to 2.4 % year on year, yet the external fuel shock and weaker currency are projected to lift inflation to about 4 % in the second quarter before retreating toward the 3 % target by 2027; two-year inflation expectations stand at 3 % (EEE) and 3.1 % (EOF). The Board will decide policy “meeting by meeting” and stands ready to act if pass-through or persistence risks intensify, reaffirming its commitment to bring 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.