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Chile’s Central Bank lowered its growth outlook for 2026 in its September Monetary Policy Report, citing a weaker labor market, declining confidence and softer consumption and investment. Governor Rosanna Costa said inflation had evolved in line with forecasts, while the bank expects growth to strengthen later, supported in part by investment and high copper prices.
Chile’s Central Bank lowered its growth outlook for 2026 in its September Monetary Policy Report, as economic activity lost momentum following an oil and commodity price shock and a weakening in domestic conditions. Central Bank Governor Rosanna Costa presented the report to the Senate on September 9, saying inflation had tracked forecasts even as the economy’s growth outlook deteriorated.
Costa said the outlook had shifted from expectations formed in late 2025, when the bank anticipated inflation would remain near 3% for much of 2026 and economic activity would grow between 2% and 3%. In the first months of this year, she said, a more favorable external environment and improved domestic expectations appeared to support that view.
The outbreak of conflict in the Middle East and the ensuing increase in oil and other commodity prices changed the bank’s assessment. The report focused on the effects of that shock on inflation, activity and monetary policy. Costa said inflation had evolved in line with forecasts, but under circumstances different from those originally expected.
She also described a contrast between the global and domestic outlooks. The global economy proved more resilient than expected, supported in part by investment tied to artificial intelligence, while Chile’s economy weakened. Supply-side disruptions early in the year were accompanied by labor-market deterioration, lower confidence and greater weakness in consumption and investment. The source material does not give the revised growth projection or a new inflation forecast.
Weaker Demand Shifts Chile’s Outlook
The downward revision matters because it signals that the external price shock has been accompanied by domestic weakness, rather than being confined to higher costs for energy and commodities. Costa’s account links slower activity to a deteriorating labor market and declining confidence, with households and businesses showing greater weakness in consumption and investment.
The report also frames the policy challenge: the bank must assess inflation alongside weaker growth. Costa said inflation remained in line with the bank’s forecasts, but the speech does not announce a change in the policy rate or set out a new policy decision. Its significance is the revised economic assessment and the risks it identifies, not a specific monetary-policy action.
The outlook for a later recovery rests partly on an expected investment rebound, which Costa said could be supported by the recently approved Reconstruction Law and high copper prices. Those are stated expectations, not guaranteed outcomes. The report’s account offers no estimate of how much either factor might add to growth.
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From Early Optimism to Weaker Activity
The September document was the third Monetary Policy Report of 2026. Under the Central Bank’s Constitutional Organic Law, Costa described its presentation to the Senate as an account of the bank’s work. The report therefore puts the bank’s economic assessment before lawmakers as well as the public.
At the end of 2025, the bank’s stated baseline was inflation around 3% and growth of 2% to 3% during 2026. Costa said conditions initially seemed consistent with that outlook, before the Middle East conflict and rising commodity prices altered the picture. She also said Chile entered the shock with inflation close to its target and without significant macroeconomic imbalances, which she described as a favorable starting position for absorbing it.
The source is a speech by Costa, reproduced by the Bank for International Settlements. The BIS notes that the views expressed are the speaker’s and do not necessarily reflect those of the BIS. The speech provides a summary of the report’s direction but does not include the full set of projections, data tables or policy deliberations.
Forecast Figures and Risks Not Specified
The speech does not state the revised 2026 growth estimate, a precise inflation projection, or the size and timing of the expected recovery. It also does not describe a change to the policy rate or identify a specific next monetary-policy decision. The full report may contain detail not included in the source speech.
Several drivers remain uncertain in the account. It gives no quantified estimate of the continuing effects of the Middle East conflict, commodity prices, labor-market weakness or lower confidence. Nor does it establish how much the Reconstruction Law or copper prices would contribute to investment and growth. Costa presented these as factors supporting a forecast, not confirmed results.
Monitor Investment and Domestic Demand
The next test of the outlook will be whether investment, consumption and labor-market conditions develop in line with the report’s assessment. The Central Bank will continue evaluating the effects of external price shocks on inflation and activity as it conducts monetary policy. The speech does not specify a date for a subsequent policy decision or give a timetable for the expected rebound.
Readers should look to the bank’s later reports and policy communications for updated projections and evidence on whether the forecast recovery is taking hold. The report’s stated expectation is that growth will pick up, with investment supported in part by the Reconstruction Law and high copper prices; the scale and timing remain open.
Key Questions
What changed in Chile’s September 2026 report?
The Central Bank revised down its growth outlook for 2026, as activity weakened amid softer labor-market conditions, confidence, consumption and investment.
What did the report say about inflation?
Costa said inflation had evolved in line with forecasts, though the conditions behind that result differed from what the bank had expected earlier in the year. The source does not provide a new numerical inflation projection.
What factors does the bank expect to support a recovery?
Costa said higher growth rates could be supported by a rebound in investment, including support from the recently approved Reconstruction Law and high copper prices. These are expectations, not confirmed outcomes.
Did the report announce a change in interest rates?
The supplied speech does not announce a policy-rate change or identify a specific upcoming rate decision. It discusses the economic outlook and the effects of the shock on monetary policy.
Source: bis.org
