Central Bank Minutes: A Dovish Twist, but No Easing

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M

Idea

September 16, 2026 01:17 PM GMT

Chile Economics | Latin America

Morgan Stanley & Co. LLC

Nicolas Eterovic

Economist

Central Bank Minutes: A Dovish

Twist, but No Easing

Morgan Stanley C.T.V.M. S.A.

Julia Lobato Barbosa

Economist

Key Takeaways

The September minutes confirm that holding at 4.50% was the clearly dominant

option, with no evidence that a cut was actively debated.

The main change is domestic: weaker consumption, investment, confidence, and

formal employment are now clearly part of the reaction function.

We read the minutes as dovish but not enough to change policy near term. We

expect the BCCh to remain at 4.50% through year-end.

The September minutes reinforce the balanced, meeting-by-meeting stance

already signaled in the statement, with the Board making clear that holding the

MPR at 4.50% was the clearly dominant option. Inflation continues to evolve

broadly as expected, two-year expectations remain anchored at 3%, and the central

scenario still sees inflation converging to target in 2Q27. Importantly, however, the

minutes contain a more dovish domestic message than the statement, even if that

has not yet translated into an easing debate.

On activity and inflation dynamics. The main novelty is on activity. Members

explicitly acknowledged that weakness has broadened from supply-driven sectors

into domestic demand, with softer consumption, weak investment, deteriorating

confidence, and continued formal job destruction representing a meaningful change

in the macro picture. This is an important evolution from earlier in the year, when

much of the activity disappointment was still being interpreted as supply-driven and

therefore less relevant for the output gap and policy. The Board nevertheless

continues to expect a recovery from 2027, supported by stronger investment

fundamentals and the implementation of the Reconstruction Law.

On inflation, the Board remained comfortable that the process is evolving broadly

as expected. Members reiterated that pass-through from the cost shock remains

consistent with historical patterns, expectations remain anchored, and convergence

…