Chile Interest Rate

The Central Bank of Chile unanimously voted to reduce the policy interest rate by 25 bps to 5.25% at its October meeting. This decision comes amid global shifts, including the Federal Reserve's rate-cutting cycle and China's economic stimulus measures. Rising long-term interest rates and a depreciating peso reflect global market reactions, alongside fluctuating oil and copper prices driven by geopolitical tensions in the Middle East. Domestically, Chile’s economy showed mixed signals. August's Monthly Index of Economic Activity grew 2.3% year-on-year, with mining contributing positively, while the unemployment rate rose to 8.9%. Inflation dropped to 4.0% in September, slightly below forecasts, driven by volatile food prices, while core inflation remained steady at 3.8%. The Central Bank signaled further interest rate cuts may follow, reaffirming its commitment to conduct monetary policy with flexibility, so that projected inflation stands at 3% over the two-year horizon.