Chile: Central Bank of Chile opts for final 2025 cut
Reduction in line with market expectations: At its last meeting of 2025 on 16 December, the Central Bank of Chile’s board cut its policy rate by 25 basis points to 4.50%—the lowest since January 2022. The reduction had been penciled in by markets and was unanimous.
Disinflation and improving external backdrop support cut: The Bank cited improving external conditions and faster-than-expected disinflation as justifying its cut. On the external front, the U.S. Fed’s December rate cut, expectations of further easing and rising copper prices offered supportive conditions for monetary policy easing.
On the domestic front, inflation continued to cool, with disinflation progressing faster than expected, making room for a reduction.
Further easing likely in 2026: The Bank provided no forward guidance regarding future policy decisions, but reaffirmed its commitment to lowering inflation towards its 3.0% target. While a majority of our panelists expect further easing in 2026, a couple have penciled in a hold and one anticipates rates to end 2026 above current levels. The Central Bank of Chile will reconvene on 26–27 January.