Chile Interest Rate

The Central Bank of Chile cut its policy rate by 25 basis points to 4.5% in a unanimous December decision, citing a more supportive external backdrop and faster progress on disinflation. The board noted improved global conditions, supported by the US Federal Reserve’s December rate cut, expectations for further easing next year, firmer equity markets, and copper prices rising above $5 per pound. Domestically, activity and demand have broadly matched the September IPoM, with non mining GDP meeting expectations and investment, particularly in machinery and equipment, strengthening, even as overall growth was held back by a weak mining sector. The labour market has improved as the unemployment rate has declined in recent months, though job creation remains limited. Inflation has eased faster than anticipated, with both headline and core inflation at 3.4% year on year in November and two year expectations anchored near 3%, consistent with inflation converging to target by Q1 2026.