Central Bank Review: Balanced Inflation Risks + Weaker Activity = Dovish

Research evidence excerpt

Central Bank Review: Balanced Inflation Risks + Weaker Activity = Dovish

Idea

June 16, 2026 11:03 PM GMT

Morgan Stanley & Co. LLCMChile Economics | North America Nicolas Eterovic

Economist

Central Bank Review: Balanced Nicolas.Eterovic@morganstanley.comMorgan Stanley C.T.V.M. S.A. +1 212 761-1245

Julia Lobato Barbosa

EconomistInflation Risks + Weaker Activity Julia.Lobato.Barbosa@morganstanley.com +55 11 3048-6016

= Dovish

Key Takeaways

BCCh left the policy rate unchanged at 4.50%, as expected, in a unanimous

decision.

The Board is no longer emphasizing upside inflation risks to the same degree and

is increasingly acknowledging weaker activity dynamics.

We continue to expect the BCCh to remain on hold in the near term, with

increasing odds of delivering a residual cut in September.

Central bank decision: BCCh left the policy rate unchanged at 4.50%, as expected,

in a unanimous decision.

Rationale for the decision: BCCh kept the MPR unchanged at 4.50%, in line with

our call, consensus expectations, and market pricing. The decision was unanimous.

The statement signals a modest shift in tone relative to the March IPoM, suggesting

that the Board is becoming more comfortable with the inflation outlook following

two benign CPI releases and an improvement in external conditions.

The most important change is in the assessment of inflation risks. In March, the

BCCh emphasized the possibility that the oil shock could generate greater

persistence through second-round effects and inflation expectations. In today's

statement, while the Board reiterates that uncertainty remains elevated and that oil

markets have not fully normalized, it explicitly notes that the balance of inflation

risks has become more balanced. This shift appears consistent with recent data: