Chile Holds Interest Rate at 4.5%

The Central Bank of Chile kept its benchmark interest rate unchanged at 4.5% at its June meeting. Policymakers noted that the balance of risks to inflation has become more even, although the macroeconomic outlook remains subject to elevated uncertainty. The conflict in the Middle East remains unresolved, and global oil supply has yet to normalize. At the same time, while economic activity has been affected mainly by temporary supply factors and demand prospects have changed little, several drivers of household consumption have evolved less favorably. As expected, headline inflation accelerated due to the shock from the Middle East conflict. Annual consumer price inflation rose to 3.9% in May, largely driven by higher fuel prices. However, core inflation has shown little change in recent months. The board reiterated that it will take the necessary measures to ensure inflation converges to its 3% target over a two-year horizon.

The Central Bank of Chile kept its policy rate unchanged at 4.5% in a unanimous decision in April 2026, citing persistent global uncertainty driven by the ongoing Middle East conflict. While oil futures still point to some easing, risks remain that energy and commodity prices stay elevated, fueling inflation risks. Still, equities recovered and currencies strengthened, while copper prices climbed around $6 per pound, above earlier projections. Domestically, activity softened, with non-mining output contracting 0.3% year-on-year in February due to supply disruptions. Consumption remained broadly stable, but investment slowed more than expected. The labor market saw little change, with steady unemployment and limited job creation. Inflation rose slightly above forecasts, with headline at 2.8% and core at 3.4%, while short-term expectations increased. Still, medium-term expectations remain anchored near the 3% target, as the central bank signaled a cautious, data-dependent approach ahead.

The Central Bank of Chile maintained its policy rate at 4.5% in a unanimous March decision, citing a significant increase in uncertainty regarding the global economic outlook due to the war in the Middle East. The board noted that an initial external boost early in the year has been overshadowed by rising oil prices around $100 per barrel and tighter global financial conditions, while copper prices have decreased from their recent peaks despite remaining above previous IPoM forecasts. Domestic activity closed 2025 with 2.5% growth, though January Imacec performance was lower than expected due to supply factors in mining and agribusiness while private consumption and investment remained dynamic. The labour market showed little change with the unemployment rate steady and job creation remaining limited. Inflation showed a reduction with headline inflation at 2.4% and core inflation at 3.3% in February, though short-term expectations have risen relevantly due to fuel prices.