The Monetary Policy Group (GPM), based at the University of Chile's Faculty of Economics and Business, recommended keeping Chile's Monetary Policy Rate (TPM) at 4.5%. It made the recommendation in a statement released on Monday 26 October 2026. The document was signed by Eugenia Andreasen, Carlos Budnevich, Humberto Martínez, Juan Pablo Medina and Andrea Tokman.
Tokman, the group's spokesperson, said the recommendation recognises both the weakness of the domestic economy and the greater inflationary pressures in the external scenario. Brent crude reached $116 per barrel on Friday, its highest level in more than five months. That is 80% above its level at the start of the year and 20% higher than at the group's previous meeting.
EXTERNAL PRESSURES REMAIN ELEVATED
The International Monetary Fund projects global growth of 3,1% for 2026. Long-term interest rates remain high: the US 10-year Treasury yield peaked in early October and, although it has moderated, is still above 5%. In late July it had closed at 4.7%, then the highest level of the Trump administration.
In the Eurozone, total annual inflation accelerated to 3,3% in August from 2,9% in July, with the energy component rising to 14,3%. The Chilean peso depreciated, taking the US dollar close to 990 pesos even though copper prices remain high. Chile is the world's largest copper producer, and the peso moves with the metal.
ACTIVITY AND JOBS WEAKEN AT HOME
The Imacec economic activity index for August fell 1,0% year-on-year and 2,1% on a seasonally adjusted basis, its sixth month of declines this year. The non-mining Imacec grew 1,4% annually, its largest rise of the year, and the statement says it will be important to see whether that is consolidated.
Unemployment reached 9,6% in the June-August quarter, one percentage point higher than a year earlier. In March-May it stood at 9.4%, the highest since June 2021. Formal salaried employment fell 2,9% over twelve months, and total employment has been declining since July. The real wage index rose 3,4% year-on-year in August but fell 0,6% from July.
GROWTH FORECASTS FALL WHILE INFLATION HOLDS
In September the Central Bank cut its 2026 growth forecast range to 0,25%–0,75%, from 1,0%–1,75% in June. The International Monetary Fund cut its projection for Chile from 1,8% to 0,6%, while the Encuesta de Expectativas Económicas (EEE) anticipates expansion of 0,2%.
The IPC consumer price index rose 0,4% month-on-month in September, below the 0,5% expected, leaving 12-month inflation at 4,1%. Annual inflation had risen to 4.3% in June from 3.9% in May. Expectations in the Encuesta de Operadores Financieros (EOF) rose to 3,7% at twelve months and 3,2% at two years, from 3,5% and 3,1%.
EARLIER CALLS AND THE OUTLOOK FOR THE RATE
The group had also recommended a 4.5% rate on 7 September. On 27 July it did so citing growing geopolitical tension and a deteriorating external scenario. On 24 July the United States had raised the tariff on imports from 60 trading partners, including Chile, to 12.5%, replacing an interim rate of 10%.
The Central Bank's board cut the rate to 4.5% in December 2025 and has kept it there since, including at its September 2026 meeting. It reaffirmed its objective of ensuring that projected inflation stands at 3% over a two-year horizon. Its survey of financial operators, released on Thursday 22 October, expects the bank to hold the rate at 4.5% at its meeting next week and leave it there for two years.