Chile Interest Rate

The Central Bank of Chile left its benchmark interest rate unchanged at 4.75% in a unanimous decision during its August meeting, as expected. The board noted that the external environment has evolved largely as expected, though uncertainties remain, including the effects of US tariffs on trade flows and their potential impact on activity and inflation. Global markets expect the Federal Reserve to resume rate cuts this month, contributing to lower rates and broad stock market gains. Domestically, Chile’s GDP grew moderately in the second quarter, driven by investment and private consumption, while the labor market shows mixed signals with an 8.7% unemployment rate. Total inflation continues to decline, but underlying inflation remains above expectations, requiring close monitoring. The Central Bank emphasized that monetary policy will remain flexible, aiming to keep projected inflation at 3% over a two-year horizon.