Heteronomics Archive

September 10, 2025

Chile: Steady Rates Amid Global Uncertainty

Chile's policy rate was held at 4.75%, surprising no consensus forecasts amid stable activity and FX markets.
Core inflation is higher than June projections, signalling persistent price pressures on goods and services.
Future moves hinge on additional data. Persistent wage-driven inflation may delay any rate cuts.

July 29, 2025

The Central Bank of Chile unanimously cut the policy rate by 25 basis points to 4.75% in July 2025, in line with market expectations, marking the first reduction of the year following six months of policy stability.
The decision was driven by better-than-expected inflation outcomes, with the headline CPI measure falling to 4.1% in June while unemployment rose to 8.9%, well above the estimated neutral rate range of 8.0-8.5%.
The evolution of external risks will influence future rate decisions, particularly US tariff measures on copper exports, alongside domestic inflation convergence and labour market dynamics as the Bank moves gradually towards its neutral rate range of 3.5-4.5%.

June 17, 2025

The Central Bank of Chile unanimously held the policy rate at 5% in June 2025, in line with consensus expectations, citing persistent global uncertainties and a favourable domestic inflation trend.
Inflation has moderated more than anticipated, with headline and core CPI easing and medium-term expectations anchored at 3%, yet inflation remains above the target range for a seventeenth consecutive month.
The outlook for future rate decisions will hinge on the evolution of external risks—primarily geopolitical and trade tensions—and the pace of inflation convergence, with the Board signalling a gradual move towards neutral rates if baseline projections hold.

March 21, 2025

The Central Bank of Chile held the policy rate at 5%, as expected, reflecting caution due to persistent inflation risks despite stronger-than-forecasted economic activity and improved financial conditions.
External uncertainty has intensified, with geopolitical tensions and US trade protectionism contributing to divergent market reactions and a global dollar weakening, supporting Chile’s terms of trade.
Domestic inflation remains elevated, and expectations are not yet fully anchored, prompting the Board to maintain a data-dependent stance focused on securing inflation convergence to its 3% target over two years.