Introduction
Madam President of the Senate, honorable Senators, on behalf of the Board of the Central Bank of Chile, I wish to express my gratitude for your invitation to present the report that, in accordance with to the Constitutional Organic Law of the Central Bank, constitutes our account before the Senate.
In this Monetary Policy Report (IPoM), the third of 2026, we note that economic conditions have evolved over the course of the year. Looking back at late 2025, we expected inflation to remain around 3% for much of this year and economic activity to grow between 2% and 3%. Moreover, during the first few months of 2026, the external environment and the improvement in domestic expectations appeared to reinforce that outlook.
However, the outbreak of the conflict in the Middle East and the resulting increase in oil and other commodity prices significantly changed the outlook. Our focus then turned to assessing the effects of this shock on inflation, economic activity, and the conduct of monetary policy. The Chilean economy was well placed to absorb the shock, as it entered this episode with inflation close to the target and without significant macroeconomic imbalances.
Since then, inflation has evolved in line with forecasts, although in a context different from the one originally anticipated. While the global economy proved more resilient than expected, supported by investment associated with the development and adoption of artificial intelligence, the Chilean economy lost momentum. The supply-side disruptions observed at the beginning of the year were compounded by a deterioration in the labor market, declining confidence, and greater weakness in both consumption and investment. As a result, in this IPoM, we once again revises down our growth outlook for this year.
Going forward, we estimate that the economy will return to higher expansion rates, supported by a rebound in investment that would be underpinned, among other factors, by the recently approved Reconstruction Law and high copper prices.