Chile’s central bank cut its growth outlook for 2026 again as weaker consumption and investment weighed on the economy, according to material published by the Bank for International Settlements.
The BIS published “Chile's September 2026 Monetary Policy Report” on Oct. 29 in its central bankers’ speeches series. The Central Bank of Chile’s revised assessment contrasted with its late-2025 expectation that economic activity would grow between 2% and 3% this year.
The central bank said the economy had lost momentum as disruptions to supply early in the year gave way to broader domestic weakness. A deteriorating labor market and declining confidence accompanied weaker spending by both consumers and businesses.
The supplied text gave no revised growth range or size of the reduction. It described another downward revision to the outlook for this year, but provided no figures measuring the weakness in consumption, investment or employment.
The central bank assessed how conditions had changed from late 2025 through the first months of 2026 and into its September outlook. Its assessment covered inflation, economic activity and the implications of higher commodity prices for monetary policy.
At the end of last year, the central bank had expected inflation to stay around 3% for much of 2026. During the first few months of this year, conditions abroad and improving domestic expectations appeared to support that outlook, it said.
The outbreak of conflict in the Middle East changed that assessment by driving up oil and other commodity prices, the central bank said. It then turned to assessing how the price shock would affect inflation, activity and monetary policy decisions.
Chile entered that episode with inflation close to its target and without large economic imbalances, the central bank said. Those starting conditions left the economy well placed to absorb the shock, although domestic activity subsequently weakened.
Inflation has followed forecasts despite an economic setting different from the one originally anticipated, the central bank said. The supplied text included no current inflation reading, and its account of price developments did not quantify the effect of higher oil prices.
The global economy held up better than expected, helped by investment in developing and adopting artificial intelligence, the central bank said. That contrasted with Chile’s loss of momentum and the weakening in domestic consumption and investment.
The central bank expects growth to recover, supported by a rebound in investment. It identified the recently approved Reconstruction Law and high copper prices among the factors that would support that recovery, without providing a numerical forecast or a timetable.
