The Central Bank of Chile left its benchmark interest rate unchanged at 4.5% at its June meeting. Policymakers noted that inflation risks are now more balanced, although the macroeconomic outlook remains highly uncertain. The conflict in the Middle East is still unresolved, and global oil supply has not yet returned to normal.
They observed that economic activity has been influenced mainly by temporary supply-side factors, while demand prospects have changed little. However, several key drivers of household consumption have recently evolved less favorably.
As anticipated, headline inflation accelerated due to the impact of the Middle East conflict. Annual consumer price inflation rose to 3.9% in May, largely reflecting higher fuel prices, whereas core inflation has shown little variation in recent months.
The Board reaffirmed that it will take whatever measures are necessary to ensure inflation converges to its 3% target over a two-year horizon.
