Central Bank continues monetary policy loosening cycle: At its meeting on 29 November, the Central Bank of the Dominican Republic...
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 2014 to 2023.
Source: Macrobond.
Chile Interest Rate Data
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| Monetary Policy 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 October
Latest bank decision: At its meeting on 17 October, the Central Bank of Chile decided to lower the monetary policy interest rate by 25 basis points to 5.25%, in line with market expectations. This takes total monetary easing since mid-2023 to 600 basis points.
Monetary policy drivers: The key domestic factors influencing the Central Bank’s decision were weak bank lending, rising unemployment, lower-than-expected inflation in September, and market inflation expectations anchored at the midpoint of the Bank’s 2.0–4.0% target range.
Policy outlook: The Central Bank of Chile indicated that the monetary policy interest rate will see further reductions going forward, without providing specific forward guidance on the exact pace of future changes. Most of our panelists expect another rate cut at the final meeting of the year in December, before further monetary easing in 2025. The policy rate is seen stabilizing at close to 4% in the medium term.
Panelist insight: Itaú Unibanco analysts commented on the outlook: “The central bank will continue to cut rates and gradually reach 4% in June next year. Overall, inflation risks stem from transitory supply factors: an electricity price adjustment; potential oil price spike if the Middle East conflict escalates further; a market risk-off move amid US elections and geopolitical events that may weaken emerging market currencies.”
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 30 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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