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Chile Holds Interest Rate at 4.5%, Warns of International Volatility
🇵🇾 Paraguay /Economy & Trade

Chile Holds Interest Rate at 4.5%, Warns of International Volatility

From ABC Color · () Spanish

Translated from Spanish, summarized and contextualized by DistantNews.

At a glance

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  • Chile's Central Bank maintained its benchmark interest rate at 4.5% on Tuesday.
  • The bank cited ongoing international volatility, including the Middle East conflict and rising oil prices, as factors influencing its decision.
  • Projections for Chile's 2026 economic growth were revised downward to a range of 1.5% to 2.5%.

The Central Bank of Chile announced its decision to maintain the benchmark interest rate at 4.5% on Tuesday, a unanimous decision by its five board members. The bank highlighted that the international landscape "continues to be marked by volatility," referencing the ongoing conflict in the Middle East and its impact on oil prices, which have contributed to increased short-term inflation expectations.

The future evolution of the monetary policy rate will be evaluated based on the development of events.

— Central Bank of ChileStatement regarding the future direction of interest rates.

Looking ahead, the bank stated that future monetary policy decisions will depend on evolving circumstances. While short-term inflation expectations have risen, expectations for the next two years remain anchored at 3%, according to both the Survey of Economic Expectations and the Survey of Financial Operators.

In the medium term, expected inflation from both the Survey of Economic Expectations (EEE) and the Survey of Financial Operators (EOF) stands at 3%.

— Central Bank of ChileInformation on medium-term inflation expectations.

Globally, the bank noted persistent uncertainty surrounding oil supply normalization due to escalating tensions following a June ceasefire between the United States and Iran. Despite this, the bank observed a "heterogeneous resilience" among countries, partly supported by investments in artificial intelligence.

The international scenario continues to be marked by volatility.

— Central Bank of ChileDescription of the current global economic climate.

Domestically, Chile's economic activity, as measured by the Imacec index, fell 0.9% year-on-year in May. This decline was attributed to supply-side factors related to natural resources and underperformance in investment-linked sectors. Consequently, the Central Bank revised its 2026 growth forecast downward from the previously projected 2%-3% range to 1.5%-2.5%. This adjustment reflects the impact of rising international oil prices on the local economy. Chile experienced 2.5% growth in 2025 and concluded the year with 3.5% inflation, its lowest in five years.

The economic activity index (Imacec) fell 0.9% year-on-year in May due to supply factors linked to natural resources, along with the poor performance of sectors linked to investment.

— Central Bank of ChileExplanation for the decline in Chile's economic activity in May.
DistantNews Editorial

Originally published by ABC Color in Spanish. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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