LatinNews Daily - 25 March 2026

*Chile’s central bank (BCCh) has voted to hold its benchmark interest rate at 4.5% for the second consecutive occasion. The interest rate has been unchanged since December, when the bank cut it by 25 basis points. In a statement, the BCCh stated that the war in the Middle East had “significantly increased uncertainty around the global economic scenario”, noting the rise in oil prices. The BCCh said that the local financial market had “mirrored global trends”, with a decline in the stock market, a depreciation of the peso, and increases in short- and long-term nominal interest rates. It said that while economic activity closed 2025 with annual growth of 2.5%, similar to forecasts the BCCh made in December, its economic activity index (Imacec) for January was lower than expected. It added that annual inflation of 2.4% in February showed a “slightly greater decline” than forecast, while core inflation stood at 3.3% year-on-year, in line with expectations. The BCCh said that the “external shock” caused by the conflict in the Middle East would “be passed on to local prices and will significantly raise inflation, which is expected to be around 4% annually in the second quarter”. However, the bank said that such effects should fade in the medium term with inflation returning to levels consistent with the target during 2027. “Given the magnitude [of the current shocks], the council will be particularly attentive to signs of increased pass-through and/or persistence of inflation,” it added, saying that the future path of monetary policy would be evaluated “on a meeting-by-meeting basis depending on how events unfold”.