- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 4.5%
The Central Bank of Chile left its monetary policy rate at 4.5%, saying the upside surprise in headline CPI to 2.8% in March, firmer core inflation at 3.4% and the risk that higher oil and other commodity prices linked to the protracted Middle-East war may lift short-term inflation and its persistence outweigh subdued domestic activity. After a 25 bp cut in December 2025, the rate has been held steady at 4.5% through the first four meetings of 2026. The Board noted that February’s non-mining Imacec contracted 0.3% y/y, private consumption is tracking expectations while machinery-and-equipment investment has softened, and unemployment remains high amid slow job creation, although a survey of the Capital Goods Corporation shows a pick-up in planned investment for 2026-2029. Financial conditions have improved: equities have recovered and the peso has appreciated alongside copper trading near USD 6 per pound, even as oil prices sit above levels assumed in the March Monetary Policy Report. Globally, resilient activity contrasts with heightened geopolitical risks that could prolong elevated energy prices and keep major central banks cautious. Stressing that the macroeconomic outlook is unusually uncertain, the Board repeated that future rate decisions will be taken meeting by meeting and pledged to act as needed to secure 3% inflation over a 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.