- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 4.5%
The Board of the Central Bank of Chile held the monetary policy rate at 4.5% in July 2026 by unanimous vote, citing a still highly uncertain macroeconomic backdrop in which Middle East tensions and oil-price volatility have lifted near-term inflation risks even as domestic activity has undershot the June Monetary Policy Report. The rate has been unchanged at 4.5% since the 25 bp cut in December 2025, after a 25 bp cut to 4.75% in July 2025. In Chile, overall activity fell 0.9% y/y in May while non-mining activity rose 0.7%, both below June projections, and the unemployment rate increased amid weak job creation and faster hourly labor costs. June CPI inflation rose to 4.3% y/y, above the June report and market expectations, while core inflation reached 3.4%; short-term inflation expectations increased with oil prices, but two-year expectations in both the Economic Expectations Survey and Financial Traders Survey remained at 3%, the central bank’s objective over that horizon. Externally, renewed attacks after a June ceasefire agreement between the United States and Iran pushed oil back toward USD100 a barrel before some moderation, while higher inflation expectations and the Federal Reserve’s tone drove up global rates and weakened most currencies, including the Chilean peso; copper traded around USD6.3 a pound. The Central Bank of Chile said policy will continue to be assessed meeting by meeting and that it stands ready to adjust as needed to ensure projected inflation returns to 3% over 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.