LatinNews Daily - 10 September 2026

*Chile’s central bank (BCCh) has released the September edition of its monetary policy report (IPoM), cutting its 2026 GDP growth forecast to 0.25-0.75%, down sharply from the 1.0-1.75% range projected in the June IPoM. The bank attributed the downgrade largely to weaker domestic spending, July’s economic performance, and lower mining output. The BCCh said activity weakened through the year, with supply-side factors hitting output in the first quarter, while from the second quarter there was a slowdown in both public and private demand, a deteriorating labour market, falling confidence indicators, and higher fuel costs. Adverse weather added further drag in the third quarter. Unemployment climbed to 9.5% in the most recent reading. Private consumption and gross fixed capital formation (GFCF) are now expected to grow 1.7% and contract 0.3%, respectively, in 2026, down from 2.2% growth for both in the June report. The bank kept its inflation forecast broadly unchanged, still seeing headline inflation “somewhat above 4%” by end-2026 and converging to the 3% target in the second quarter of 2027. Core inflation is expected to remain around 3% for most of the forecast horizon. Looking to 2027-2028, the BCCh expects growth of 2-3% and 2.25-3.25%, respectively, aided by President José Antonio Kast’s newly approved economic mega reform, which it estimates will add roughly 0.5 percentage points to annual growth in each year.

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