Chile Maintains Rate at 4.75%

The Central Bank of Chile maintained its policy rate at 4.5% in a unanimous January decision, citing a more supportive external backdrop and continued progress on disinflation. The board noted improved global conditions, highlighted somewhat stronger US activity and higher copper prices above levels at the previous meeting while warning that geopolitical fiscal and financial risks persist. Domestically activity and demand have broadly matched the September IPoM, with short-term indicators for consumption and investment in line with expectations, even as the Imacec total and non-minero contracted 0.6% and 0.5% month on month in November. The labour market showed little change with the unemployment rate steady and job creation remaining limited. Inflation eased toward target with headline inflation at 3.5% year on year and core inflation at 3.3% in December, and two year inflation expectations remaining anchored at 3%, consistent with convergence to the target over the policy horizon.

The Central Bank of Chile cut its policy rate by 25 basis points to 4.5% in a unanimous December decision, citing a more supportive external backdrop and faster progress on disinflation. The board noted improved global conditions, supported by the US Federal Reserve’s December rate cut, expectations for further easing next year, firmer equity markets, and copper prices rising above $5 per pound. Domestically, activity and demand have broadly matched the September IPoM, with non mining GDP meeting expectations and investment, particularly in machinery and equipment, strengthening, even as overall growth was held back by a weak mining sector. The labour market has improved as the unemployment rate has declined in recent months, though job creation remains limited. Inflation has eased faster than anticipated, with both headline and core inflation at 3.4% year on year in November and two year expectations anchored near 3%, consistent with inflation converging to target by Q1 2026.

The Central Bank of Chile left its benchmark interest rate unchanged at 4.75% in a unanimous decision during its October meeting, as expected. The board noted that the external environment has evolved largely as projected, with the US Federal Reserve cutting rates amid signs of labour market weakness and a partial US government shutdown. Global financial markets have performed favourably overall, while oil prices fell slightly and copper rose sharply on supply constraints and geopolitical factors. Domestically, activity and demand have evolved in line with projections from the September IPoM, with August’s Imacec contracting 0.7% month on month but rising 0.5% year on year, while the non-mining component increased 1.7%. The labour market continues to send mixed signals, with a mild decline in unemployment and slowing wage growth. Total inflation reached 4.4% in September and core inflation 3.9%, both in line with forecasts, while two-year inflation expectations remain around 3%.