Central Bank of Chile Holds at 4.75%
Central Bank of Chile Holds Monetary Policy Rate Steady at 4.75%
The Board of the Central Bank of Chile (BCCh) decided to hold the monetary policy interest rate (MPR) at 4.75% during its meeting on Tuesday, October 28, 2025. This decision was adopted by the unanimous vote of its members.
Global and Financial Context
The external environment has evolved generally in line with predictions set forth in the September Monetary Policy Report (IPoM). Internationally, the Federal Reserve (Fed) cut its interest rate. This occurred amid indications of a weakening labor market and somewhat more resilient economic activity, coupled with factors expected to maintain upward pressure on inflation. Notable external events included the U.S. federal government’s partial shutdown over several weeks. Furthermore, while a possible preliminary agreement has been announced in the trade dispute between the United States and China, sources of uncertainty concerning the commercial front remain significant.
Global financial markets have performed favorably, although they have fluctuated since the previous meeting. Interest rates have been driven down by market expectations regarding forthcoming Fed decisions. The U.S. stock market has also seen a boost, attributed to market perceptions regarding the economic impact of technological breakthroughs. Currency movements have been mixed, with several Latin American currencies appreciating. While oil prices have been volatile, they currently stand slightly below levels recorded at the previous meeting. In contrast, the copper price has risen significantly, partially driven by geopolitical factors and global supply constraints.
Locally, both short-term and long-term interest rates in the financial market have shown moderate changes since the last meeting. The peso has appreciated, and the stock market has recorded gains. The credit market exhibits no major changes, and the third quarter Bank Lending Survey (BLS) reported no significant variation in the perceived supply of or demand for credit.
Domestic Activity and Inflation Metrics
Overall, domestic activity and demand are evolving in line with the forecasts established in the September IPoM. In August, the Imacec (Economic Activity Index) posted a monthly decline of 0.7% in the total indicator and 0.5% in its non-mining component, based on seasonally adjusted figures. On an annual basis, these indicators grew by 0.5% and 1.7%, respectively. The monthly result was notably impacted by declines in high-volatility sectors like mining and entrepreneurial services, while sustained improvements were observed in manufacturing performance and wholesale and retail trade.
High-frequency indicators suggest that private consumption aligns with expectations. Investment appears more dynamic, particularly in machinery and equipment. The labor market continues to present mixed signals, showing slow job creation despite a slight decline in the unemployment rate. Additionally, annual wage growth has moderated.
Regarding price stability, September saw the annual change in headline CPI reach 4.4% and core CPI—which excludes volatile items—register 3.9%. Both figures were consistent with the forecasts detailed in the latest IPoM. Looking forward, two-year inflation expectations are 3% in the Economic Expectations Survey (EEE) and 3.1% in the Financial Traders Survey (EOF).
Policy Outlook
The Board will continue to evaluate future movements of the MPR by monitoring the evolution of the macroeconomic scenario and its implications for inflation convergence. The current situation, while consistent with the September IPoM estimates, still poses risks for the future trajectory of inflation. This warrants a period of awaiting more information before the BCCh continues the process of guiding the MPR toward its neutral range of values. The Board reaffirmed its commitment to flexibility in conducting monetary policy, with the goal of projecting inflation at 3% over a two-year horizon.
The official minutes of this Monetary Policy Meeting are scheduled for publication at 8:30 hours on Thursday, November 13, 2025. The next Monetary Policy Meeting will be held on Tuesday, December 16, 2025.