Chile's central bank is widely expected to keep its benchmark policy rate at 4.5% on Tuesday, the seventh consecutive meeting at that level, according to a Briefs Finance report published October 27, 2026. The decision is due after the close of trading. The board, led by Rosanna Costa, is expected to match every forecast in Bloomberg's survey.
Market pricing has shifted since September, however, and traders now assign high odds to a quarter-point increase within six months, rather than a start to tightening roughly a year away. Credicorp Capital's chief economist for Chile, Samuel Carrasco, said, “The risks to the policy-rate path are now tilted more toward potential hikes than an extended hold.” He expects policymakers to adopt a more hawkish tone in the statement, opening the door to possible increases in December or during the first quarter of 2027. Scotiabank's team, led by Jorge Selaive, projects a shift in tone on October 27, a 25 basis point move on December 15, and a possible further 25 basis point increase at the January 2027 meeting.
Inflation is the main driver of this repricing. Headline inflation stood at 4.1% in September from a year earlier, above the central bank's 3% target, and two-year expectations have risen above that goal. UF forwards, which price in Chile's inflation-linked unit, imply CPI peaking at 5.4% in February before easing to below 4% in April.
A central bank survey published October 22 showed traders expecting 24-month inflation at 3.2%. Fuel prices and the currency are adding to the pressure. Enap announced its fifth consecutive increase, lifting diesel prices by about 6.7% and 93- and 97-octane gasoline by 2.9% and 2.8%, respectively.
Finance Minister Jorge Quiroz said the government is still spending around $80 million per week to cushion pump prices and warned that further adjustments will be needed if global pressures persist. Scotiabank highlighted the peso's fall to an 18-month low and the risk that currency weakness passes through to core prices. The bank also pointed to fiscal plans, with government expenditure now forecast to rise 1.5% in 2027, more than twice the rate the central bank projected in its September report.
Scotiabank's assessment is that elevated global interest rates make the central bank's target of 3% inflation by the second quarter of 2027 harder to reach. Oil prices are another headwind. According to the report, Brent has traded above $100 since September and sits near its late-April highs, up more than 90% this year after the Iran war disrupted Persian Gulf flows.
Alexis Vega, who oversees market-making operations at Banco de Credito e Inversiones, said, “The shock is no longer temporary, and those higher costs are very likely to start spilling over into other sectors of the economy.” He added, “The danger is that those effects begin to unanchor inflation expectations.” Economic activity provides some offset. The economy has cooled amid elevated unemployment, harsh weather, mining interruptions and sluggish investment. Quiroz said copper output could fall 8% to 9% this year, which he estimated would cut about one percentage point from GDP directly and an additional half point through spillovers.
Analysts in the central bank's October survey expect GDP to rise 0.2% this year, rebounding to 3% in 2027. Quiroz also expects a “large injection” of public-sector activity in late 2026 and the first half of 2027, focused on construction, public works, housing and municipalities, while investment is expected to firm following approval of an economic omnibus bill that includes tax cuts. Global factors also weigh on the outlook.
Investors expect the Federal Reserve to hold rates on Wednesday before a 25 basis point increase in December. Vega said, “We expect the central bank to remain on hold at this meeting and possibly at the next one in December. But if inflation expectations materialize and the Fed continues raising rates, the possibility would begin to emerge that the Chilean central bank's next move would be a hike.” Overall, Chile is balancing slower growth against persistent price pressures, and markets already lean toward a rate hike within six months.
Key variables to monitor include CPI releases, the peso, fuel price adjustments and fiscal plans.
Source: briefs.co