- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 4.5%
The Central Bank of Chile held its monetary policy interest rate at 4.5% in June 2026 by unanimous vote, as it weighed a rapid rise in headline inflation from the Middle East oil shock against weaker-than-expected domestic activity, while judging that the balance of inflation risks had been shifting gradually toward equilibrium but that uncertainty remained unusually high. At home, economic activity contracted in the first quarter and undershot the March IPoM, largely because of weak natural resource sectors, while private consumption remained dynamic, gross capital formation weakened and unemployment rose amid soft job creation. Headline CPI inflation accelerated to 3.9% year on year in May, driven by fuel prices, while core inflation was little changed at 3.2%, and the Economic Expectations Survey placed two-year inflation expectations at 3%. Externally, oil recently fell to slightly below USD80 per barrel on average for WTI and Brent after a new US-Iran ceasefire agreement, Chilean financial markets reacted positively and the USD depreciated globally, while copper remained above USD6 per pound. The central bank said the regional conflict remained unresolved and global oil supply had not normalized, even as global activity stayed resilient and central banks maintained a cautious stance. It said the future path of the policy rate would be assessed meeting by meeting and reiterated that it would take whatever decisions were necessary to bring projected inflation to 3% 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.