Central Bank holds for third meeting in a row: On 20–21 January, the Monetary Policy Committee of the National Bank...
Policy Interest Rate in Chile
Chile's central bank gradually lowered interest rates during the 2010s in response to moderate economic growth and inflation. During the 2019 social unrest and the 2020 COVID-19 pandemic, rates were significantly lowered to stimulate the economy. As inflation began rising sharply in 2021, the central bank initiated a series of rate hikes, aiming to curb inflation while cautiously supporting economic recovery amid global and domestic uncertainties.
The Monetary Policy Rate ended 2022 at 11.25%, significantly above the 4.00% end-2021 value and more than double the reading of 4.50% a decade earlier. For perspective, the average policy rate in Latin America was 18.90% at the end of 2022. For more interest rate information, visit our dedicated page.
Chile Interest Rate Chart
Note: This chart displays Policy Interest Rate (%) for Chile from 2024 to 2023.
Source: Macrobond.
Chile Interest Rate Data
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| Policy Interest Rate (%, eop) | 1.75 | 0.50 | 4.00 | 11.25 | 8.25 |
| 10-Year Bond Yield (%, eop) | 3.14 | 2.65 | 5.65 | 5.32 | 5.30 |
Central Bank of Chile decreases rates in December
Latest bank decision: At its meeting on 17 December, the Central Bank of Chile decided to lower the monetary policy interest rate by 25 basis points to 5.00%. This took total monetary easing since mid-2023 to 625 basis points.
Monetary policy drivers: The key domestic factors influencing the Central Bank’s decision were likely weak bank lending, job creation and private consumption; core inflation within the Bank’s 2.0–4.0% target range; and well-anchored inflation expectations.
Policy outlook: The Bank struck a hawkish tone, highlighting that risks to the inflation outlook were skewed to the upside in the short term. However, our panelists still expect several more rate cuts in 2025 as the Bank aims to support the economy.
Panelist insight: Itaú Unibanco analysts commented on the outlook: “We interpret the decision as a “hawkish cut” that signals the BCCh will take some time to assess if macro conditions allow for additional cuts towards the nominal neutral rate range. […] Our baseline scenario had incorporated intermeeting cuts with a pause in January and reaching the ceiling of the nominal neutral rate range of 4.5% in June; yet the BCCh may take even longer to get there.” Goldman Sachs’ Sergio Armella said: “The central scenario of the [Central Bank’s] policy rate corridor is consistent with a hold at the January MPC meeting and a quarterly pace of cuts through the third quarter of 2025 to 4.25% by September. This is consistent with our forecast.”
Consensus Forecasts and Projections for the next ten years
How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Chilean interest rate projections for the next ten years from a panel of 32 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Chilean interest rate.
Download one of our sample reports to visualize what a Consensus Forecast is and see our Chilean interest rate projections.
Want to get access to the full dataset of Chilean interest rate forecasts? Send an email to info@focus-economics.com.
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