Chile's Central Bank raises inflation forecast to 4%, lowers GDP outlook

Chile's Central Bank (BC) adjusted its March Monetary Policy Report (IPoM), raising the year-end inflation projection to 4% and lowering the GDP growth forecast to a range of 1.5%-2.5%. These revisions reflect the impact of rising international fuel prices, linked to the Middle East conflict.

Key points

• Inflation projection for December was increased from 3.2% (December forecast) to 4%, with a return to the 3% target expected by the second quarter of 2027.
• The lower GDP growth forecast for 2026 is attributed to the changed international scenario and weaker mining performance.
• The BC maintained the monetary policy interest rate at 4.5%.
• The revised estimates incorporate local gasoline and diesel price hikes announced on March 23rd.
• The Central Bank Council will closely monitor signals of greater transmission or persistence of inflation.

Why it matters

These adjustments signal a more challenging short-term economic outlook for Chile, driven by external shocks impacting domestic prices, which the Central Bank is monitoring closely while holding the key interest rate steady.