MNI Chile CB Preview - Sep 2026: On Hold, Risk of Dovish Tilt

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Executive Summary

• The BCCh is expected to keep its reference rate unchanged at 4.50% for a sixth consecutive meeting on Tuesday, as it maintains its meeting-by-meeting approach to monetary policy.
• Ongoing geopolitical uncertainties and persistent energy price pressures warrant a continuation of the central bank’s cautious stance at this juncture.
• However, recent much weaker-than-expected economic activity data have increased the risk of a dovish tilt and raised the possibility that policymakers will consider renewed easing ahead.

While inflation has come in slightly below expectations since the July MPC meeting, the most notable development has been the weakness of economic activity, which has increased the risk of a dovish tilt by the central bank this week. In the second quarter, the economy narrowly avoided recession, with real GDP unchanged in q/q terms, following a 0.3% q/q contraction in Q1. This was well below expectations for a +0.3% q/q rebound, as both private consumption and investment declined over the quarter. In annual terms, real GDP fell by 0.2% y/y, following a 0.3% y/y decline in Q1, below the central bank’s +0.4% y/y projection.

Subsequent data then revealed that the economy also made a weak start to the third quarter, as economic activity slumped by 1.7% m/m (sa) in July, the largest fall since July 2022, dragging the annual rate of growth down to a more than three-year low of -1.5% y/y. This was partly due to the impact of recent adverse weather conditions, as heavy rainfall caused major disruption to mining and manufacturing activity. In particular, copper production declined sharply, falling by more than 9% over the month. Excluding mining, however, economic activity still contracted by 0.5% m/m in July (-0.3% y/y), leaving it tracking below the central bank’s expectations. Meanwhile, the unemployment rate ticked up to 9.5% in July, its highest level for five years.