Chile's Central Bank Projects Economic Growth and Inflation Rates for 2025-2026

Investing.com -- The Central Bank of Chile announced in its December Monetary Policy Report that it forecasts economic growth between 1.5% and 2.5% for the years 2025 and 2026. This prediction follows the country's economic growth of 2.3% this year. The report attributes these forecasts to an increase in public spending and a greater contribution from the external sector, while also noting that they are balanced by a decrease in incentives for household and business demand.

The bank's report indicates that this year's economic growth will be at the lower end of the previously estimated range of 2.25% to 2.75%.

In terms of inflation, the bank predicts that the annual rate will close this year at 4.8% and will be 3.6% by the end of 2025. It expects the inflation rate to decline to the target of 3% by early 2026. The report acknowledges that inflation is currently higher than it was a few months ago, attributing this to factors such as the global strengthening of the US dollar and rising local labor costs.

The central bank also announced on Tuesday that it reduced the key interest rate by 25 basis points to 5.0%. The bank stated that there are upward risks to inflation in the short term, and therefore caution is required.

The report suggests that a weaker outlook for domestic demand in the medium term should alleviate cost pressures.

Additionally, the bank forecasts that the price of copper, Chile's main export product, will be $4.20 per pound in 2025 and $4.30 per pound in 2026.