Chile’s central bank has continued its monetary easing cycle, cutting the benchmark interest rate by 25 basis points to 5.25%. This marks the latest step in a series of cuts that began last year as the country seeks to manage inflation while stimulating economic growth. The decision, made unanimously by the bank’s board, aligns with market forecasts and signals potential further reductions in the months ahead if the economic outlook remains stable.
Chile’s economy, heavily reliant on copper production, has faced challenges in recent years as output of the metal has stalled. Despite these struggles, the bank noted that inflation is gradually cooling, with the rate dropping to 4.1% in September, down from 4.7% the previous month. Analysts expect this trend to continue, with projections indicating inflation will stabilize around 3% over the next two years.
The central bank emphasized its flexible approach to monetary policy, reaffirming its commitment to bringing inflation down to its target of 3%. If current conditions hold, additional rate cuts are anticipated, with some experts predicting the benchmark rate could reach 4.0% by mid-2025. However, the bank remains cautious, acknowledging that external factors, such as global market fluctuations and domestic economic conditions, could influence future decisions.
Chile’s central bank is closely monitoring domestic activity, including mining performance and consumer demand, which remain in line with expectations. While the outlook is positive for now, uncertainties in the external environment, particularly related to the global commodities market, could impact the path of future rate cuts.
