Chile's Central Bank released its December Monetary Policy Report, raising the GDP growth projection for 2026 to 2% to 3%, driven by higher investment and copper prices. Inflation will converge to 3% in the first quarter of 2026, in a more favorable scenario than anticipated. Experts agree on the optimism but highlight risks in the labor market and abroad.
Chile's Central Bank's December Monetary Policy Report (IPOM) unveils a more positive economic outlook for next year, coinciding with the start of José Antonio Kast's government. The GDP growth projection for 2025 centers on 2.4%, while for 2026 it rises to a 2% to 3% range, higher than the 1.75%-2.75% estimated in September. This improvement stems from greater dynamism in investment, particularly in machinery and equipment driven by mining and energy projects, with projected growth of 7% in 2025 and 4.9% in 2026.
Central Bank President Rosanna Costa emphasized that 'we close 2025 with a more favorable performance than estimated at the beginning of this year.' External factors like global economic resilience, a higher structural copper price, and improved terms of trade fuel the optimism. Domestically, private consumption will grow 2.7% in 2026, supported by higher consumer confidence and wage mass, though the labor market shows limited improvements with unemployment above historical averages.
On inflation, the Central Bank expects convergence to 3% in the first quarter of 2026, due to recent data like October's low inflation, electricity tariff reductions, and currency appreciation. The annual projection for 2025 is 3.6% and for 2026, 3.2%. Finance Minister Nicolás Grau welcomed the report: 'inflation is controlled, on the verge of reaching the target, there is an investment level of 7% and a good investment level for the coming years.'
Experts like Priscila Robledo from Fintual endorse the increase: 'there are reasons to be more optimistic in terms of growth: institutional strength and lower uncertainty, Chile's potential to play an important role in the AI wave.' Hermann González from Clapes UC sees an 'upward bias' in the range, possibly exceeding 3% with new government policies. However, Sergio Lehmann from Bci estimates 2.2%, factoring in a likely fiscal adjustment. Risks include labor weakness and global tensions, such as wars or trade conflicts.
Regarding the policy rate (TPM), currently at 4.5%, the Central Bank raised its neutral range to 3.75%-4.75%, with a possible cut to 4.25% by mid-2026 if inflation converges.
