Chile’s Central Bank Holds Rates At 4.5% As Inflation Cools Faster

Key Points

1. The Central Bank of Chile kept its benchmark rate at 4.5%, as markets expected.
2. Officials said near-term inflation should be lower than their December projection.
3. Mixed growth and credit signals pushed policymakers toward patience, not promises.

Chile’s central bank hit pause again. It kept the Monetary Policy Rate, or TPM, at 4.5%. The board voted unanimously.

The bank said the macro picture has shifted slightly. In the short run, inflation should be lower than it forecast in December. Demand has evolved broadly in line with projections.

Recent inflation readings support the cautious tone. December inflation was 3.5% year over year. Core inflation was 3.3%. Two-year inflation expectations remain anchored at 3% in two surveys the bank tracks.

Activity data were softer, but not decisive. IMACEC fell in November. The total index dropped 0.6% on a seasonally adjusted basis. Non-mining IMACEC fell 0.5%. The bank said some drags looked temporary.

Signals for households and firms are split. The bank still sees consumption and investment growing near its expectations. But it wants confirmation in coming data.

Financial conditions also mattered. The peso has strengthened since the prior meeting. Chilean rates moved only modestly across maturities. That narrowed the gap with U.S. rates. Credit volumes were broadly stable.

Banks are not signaling a sharp tightening. A lending survey showed standards were largely unchanged. It also showed higher perceived demand in real estate.

The external backdrop remains two-sided. The bank cited stronger-than-expected U.S. performance in the third quarter. It also noted higher copper prices versus its last meeting.

Still, it warned that geopolitical, fiscal, and financial uncertainties keep global risks elevated. The calendar now becomes the story. Minutes from the January meeting are due on February 4 at 8:30 a.m. local time.

The next rate decision is set for March 24. The statement is due at 6:00 p.m. Guidance is also expected in March’s Monetary Policy Report.

The bank amplified the decision on its official channels. It posted the headline and links on LinkedIn. It also shared explainers on Instagram.

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