- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 4.5%
The Central Bank of Chile’s Board unanimously held its policy interest rate at 4.5% amid significantly higher inflation risks and a weaker near-term growth outlook, extending the pause following a 25-basis-point cut from 4.75% in December 2025. Annual headline and core inflation stood at 4.1% and 3.2%, respectively, in September, in line with forecasts, but inflation projections for the coming months rose significantly above the September Monetary Policy Report’s baseline. August economic activity undershot forecasts mainly because of mining, while third-quarter indicators showed continued weakness in consumption and particularly investment. The Board warned that economic weakness could prove more persistent than expected. The peso depreciated as local financial markets mirrored tighter international conditions. Escalating Middle East tensions increased energy costs, while an unusually intense El Niño began pushing up international food prices, adding to global inflation concerns. The Board will assess policy meeting by meeting, paying particular attention to stronger or more persistent transmission of these shocks to inflation, and reaffirmed its commitment to bringing projected inflation to 3% over a two-year horizon.
Rate evolution
From June 2025 to October 2026, the Central Bank of Chile lowered the policy rate by 50 basis points from 5.0% to 4.5%, with cuts in July and December 2025 and no change thereafter. 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.
After faster-than-expected disinflation and reduced convergence risks justified the December cut, the holds on 28 July and 8 September 2026 came amid renewed Middle East conflict, oil prices near USD 100 per barrel, weaker activity and demand and rising unemployment, while two-year inflation expectations remained at 3%.
On 27 October 2026, the Board again unanimously held the policy rate at 4.5% as intensified Middle East tensions pushed oil prices about 25% above their level at the close of the September Monetary Policy Report and an unusually intense El Niño added pressure on international food prices. Annual headline and core inflation stood at 4.1% and 3.2%, respectively, in September, while short-term market inflation expectations rose significantly and two-year expectations remained at 3% in the Economic Expectations Survey but increased to 3.2% in the Financial Traders Survey. With inflation risks rising and near-term activity prospects weakening, the Board retained its meeting-by-meeting approach, stressed vigilance for greater transmission or persistence of the shocks in inflation and flagged the risk that domestic weakness could last longer than expected.