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Chile’s Central Bank lowered its growth outlook for 2026 in its September Monetary Policy Report, Governor Rosanna Costa told the Senate. She cited a weaker labor market, lower confidence and softness in consumption and investment, after a Middle East conflict drove up oil and other commodity prices. The report expects growth to strengthen later, supported in part by investment, but the source does not provide forecast figures or new monetary-policy decisions.
Chile’s Central Bank revised down its 2026 growth outlook again, Governor Rosanna Costa told the Senate on September 9, citing a loss of economic momentum as labor conditions, confidence, consumption and investment weakened. In presenting the Bank’s third Monetary Policy Report of the year, Costa said inflation had evolved in line with forecasts despite a sharply changed external backdrop, including higher oil and commodity prices following the outbreak of conflict in the Middle East.
Costa said the Bank’s earlier outlook, formed in late 2025, had anticipated inflation near 3% for much of 2026 and annual economic growth of 2% to 3%. In the first months of this year, she said, external conditions and improving domestic expectations appeared consistent with that assessment. The conflict in the Middle East and the resulting rise in oil and other commodity prices altered the outlook and led the Bank to focus on how the shock could affect inflation, activity and monetary policy.
The economy entered the shock with inflation close to the Bank’s target and without what Costa described as significant macroeconomic imbalances. She said inflation had since developed in line with the Bank’s forecasts, but economic activity weakened. Supply-side disruptions early in the year coincided with a deteriorating labor market, falling confidence and greater weakness in both household consumption and investment. Costa did not give the revised growth forecast figures in the supplied speech text.
Looking ahead, the report projected a return to higher growth rates, supported by an investment rebound. Costa cited the recently approved Reconstruction Law and high copper prices among factors that could underpin investment. That outlook is a forecast, not a confirmed outcome; the speech excerpt does not specify the expected timing or size of the rebound.
Weaker Activity Shifts the Outlook
The revision matters because it signals that the Central Bank sees domestic weakness extending beyond the initial effects of higher commodity prices. A softer labor market and weaker confidence can restrain household spending, while reduced investment can weigh on near-term activity and the economy’s capacity to expand. Costa’s account links these pressures to the downgrade, rather than attributing it solely to the external shock.
The report also describes a policy challenge: the commodity-price shock changed the inflation outlook, while weaker activity pointed to diminished growth. Costa said inflation had tracked forecasts, but the speech does not set out a new interest-rate decision or a specific policy path. For readers, the report is an assessment of how the Bank sees the balance of risks evolving, not an announcement of a rate change.
The projected recovery also has practical significance for businesses and households, because investment is a key part of the Central Bank’s stated route back to stronger expansion. The Bank’s reference to the Reconstruction Law and copper prices identifies potential supports, but does not establish that they will be sufficient to offset the economy’s present weakness.
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From Early Optimism to Downgrade
The September report was the third Monetary Policy Report of 2026. Costa presented it to the Senate under the Central Bank’s reporting relationship with the legislature. The speech says the Bank began the year with an outlook shaped by domestic expectations and a global environment that appeared supportive, before the Middle East conflict and price increases changed the assumptions behind that outlook.
Costa also contrasted Chile’s experience with a more resilient global economy. She said global activity held up better than expected, supported by investment associated with developing and adopting artificial intelligence, while Chile lost momentum. The speech does not provide comparative growth rates or detail how much of Chile’s slowdown came from external versus domestic forces.
The source is a BIS-published copy of Costa’s presentation. The BIS notes that views expressed in the speech belong to the speaker and do not necessarily reflect the BIS’s views. The economic assessments and projections described here are therefore attributed to Costa in her capacity as Central Bank governor.
Forecast Figures and Policy Details
The supplied speech does not state the revised numerical growth forecast, the inflation projections beyond the reference to inflation tracking forecasts, or the assumptions underlying those estimates. It also does not identify a change to the policy rate or give a new timetable for monetary-policy decisions. Those details should not be inferred from Costa’s summary.
It remains uncertain how long the labor-market deterioration and weakness in consumption and investment will persist, and whether the expected investment rebound will materialize. The report identifies high copper prices and the Reconstruction Law as potential supports, but does not quantify their likely contribution. The economic effects of the Middle East conflict and commodity-price increases may also change as conditions develop.
Monitoring Activity and Investment
The next milestones are the Central Bank’s subsequent assessments of inflation, economic activity and the conditions shaping monetary policy. The speech does not provide a date for the next report or announce a specific policy action. In the meantime, the indicators Costa identified—labor-market conditions, confidence, consumption and investment—will help show whether the slowdown is continuing or easing.
Investors and households will also be watching whether investment responds to high copper prices and the approved Reconstruction Law, as the report expects. Future Central Bank publications and decisions will clarify whether the projected return to higher growth remains plausible and how the Bank weighs that outlook against inflation developments.
Key Questions
What did Chile’s September 2026 Monetary Policy Report say?
Governor Rosanna Costa said the Central Bank had revised down its growth outlook for 2026 again because the economy had lost momentum. She pointed to labor-market weakness, lower confidence and softer consumption and investment, while saying inflation had evolved in line with forecasts.
Why did the Central Bank lower its growth outlook?
Costa cited a combination of early-year supply disruptions, a deteriorating labor market, weaker confidence, and greater weakness in consumption and investment. The Middle East conflict and higher oil and commodity prices also changed the economic outlook.
Did the report announce an interest-rate change?
The supplied speech does not announce a policy-rate change or specify a new interest-rate path. It says the Bank assessed the shock’s implications for monetary policy, but does not provide a decision.
What could support Chilean growth from here?
The report anticipates higher growth rates supported by a rebound in investment. Costa identified the recently approved Reconstruction Law and high copper prices as possible supports, but did not quantify their effects or give a timetable.
Source: bis.org
