- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 4.5%
The Central Bank of Chile unanimously held its monetary policy interest rate at 4.5%, balancing weaker-than-projected domestic activity against above-target headline inflation and heightened external uncertainty. After holding the rate at 4.75% in September and October 2025 and cutting it by 25 basis points in December, the central bank has maintained 4.5% since January 2026. Economic activity remained weak in the second quarter and early third quarter as domestic demand slowed, while job losses and higher unemployment underscored labor-market softness. Annual headline inflation rose to 4.1% in August due to volatile components, while core inflation was 3.3% and two-year expectations remained at the 3% target. The U.S. dollar depreciated globally, while renewed escalation in the United States-Iran conflict pushed oil close to USD 100 per barrel, adding to inflation risks even as global activity remained resilient, particularly in economies linked to artificial intelligence production. The Board will assess the rate path meeting by meeting and reiterated its commitment to ensuring projected inflation reaches 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.