Chile Central Bank Holds Rate at 4.5%

The Central Bank of Chile unanimously decided to hold its benchmark monetary policy rate at 4.5% on 8 September. The board noted that the macroeconomic environment carries higher uncertainty than usual. Between January and July, the Chilean economy accumulated a contraction of 0.4%, while unemployment reached 9.5%.

Annual inflation rose to 4.1% in August, driven by volatile components such as fuel costs, while core inflation held at 3.3%. Both the Economic Expectations Survey and the Financial Traders Survey project inflation at the 3% target on a two-year horizon. The central bank emphasized that future rate adjustments will continue to be evaluated meeting by meeting.

Domestic activity weakened across the second quarter and early third quarter. Seasonally adjusted private consumption and gross fixed capital formation contracted in the second quarter, compounded by adverse weather in July. However, policymakers noted investment prospects remain supported by copper prices above $6.5 per pound and expected stimulus from the Reconstruction Law starting in 2027.

In external markets, escalating tensions between the United States and Iran pushed crude oil prices near $100 per barrel. Persisting global inflation risks have kept major central banks restrictive, though global demand remains supported by supply chains linked to artificial intelligence.