MercoPress. South Atlantic News Agency

Chile's Central Bank keeps basic interest rate unchanged

Chile's Central Bank also foresaw that inflation would “continue at high levels in the immediate future”

Chile's Central Bank unanimously decided Tuesday to keep the Monetary Policy Rate at 5%, aligning with market expectations. The bank highlighted increased global uncertainty due to U.S. tariffs under Donald Trump and geopolitical conflicts, given “uncertainty about the outlook for the global economy has increased considerably since the previous meeting, particularly following the tariff announcements made by the United States in early April and subsequent developments,” which have negatively impacted perceptions of global growth.

“This has led to a negative perception about the future performance of the U.S. economy, along with prospects for higher inflation. In the rest of the world, there is also a perception that these events and geopolitical conflicts will have negative effects on growth. With respect to price pressures, they could be reduced in those countries that do not modify their trade policy,” the bank said in a statement.

Amid global financial markets' volatility, Chile's local scene has seen improved conditions, including lower interest rates, peso appreciation, and a rising stock market. Economic activity in Chile shows dynamism, driven by exports, with February's Imacec slightly below expectations and March inflation at 4.9%.

The bank noted that trade policy changes create uncertain effects on Chile's economy, but inflation is expected to converge toward 3%, though caution remains necessary.

The Central Bank board also pointed out that the local market has also been affected by the high external volatility, although since the beginning of April, “local financial conditions have improved, with a decrease in short and long-term interest rates, an appreciation of the peso and a rise in the stock market.” Regarding economic activity in Chile, indicators point to a greater dynamism, supported in large part by the performance of exports.

March inflation (4.9%), in turn, is in line with the IPoM, while core inflation was also somewhat lower than projected. However, two-year expectations “have been adjusted towards 3%, although some indicators are still above that value,” the statement went on.

It also foresaw that inflation would “continue at high levels in the immediate future.”