The Central Bank of Chile cut its benchmark interest rate by 25 basis points to 4.75% in a unanimous decision during its July meeting, citing persistent global uncertainty and mixed domestic signals. While the Israel-Iran conflict has ended, military tensions linger, and the US has introduced new tariffs, including on Brazil and copper, raising global trade concerns. Despite these developments, international financial markets have reacted mildly, and Chile’s economy continues to align with projections in the June Monetary Policy Report. Inflation came in lower than expected in June, with headline CPI falling 0.4% month-on-month, though core inflation remained flat. Domestically, consumption and investment have grown, but the labor market shows weak job creation and a rising unemployment rate. The Bank reaffirmed its commitment to guiding inflation toward the 3% target over a two-year horizon, signaling a flexible approach to future rate decisions.
