In its March 2026 Monetary Policy Report (IPoM), the Central Bank of Chile noted that the war in the Middle East drove up energy prices, worsened global financial conditions, and increased uncertainty, all of which had a direct impact on inflation and the economic outlook.  

In our country, inflation was below 3%, but a temporary rise to 4% is projected, with March inflation at 1.0%, driven by rising fuel prices. This caused the UF to break through the $40,000 barrier, while the expected growth for 2026 is projected to be in the range of 1.5% to 2.5%.  

Given this scenario, we saw that members of the regulatory body’s board considered raising the monetary policy rate (MPR) in response to these pressures. Although they decided to keep it unchanged, the option of raising it came into consideration as a way to address the shocks and inflation projections. 

Here we ask ourselves: Is the ground being laid for another increase in the monetary policy rate?  

In terms of market sentiment, we are seeing a mix of caution and a search for yield. While we are seeing increases in some spreads, these have not been particularly aggressive (5 bps). What we are seeing primarily is market participants seeking refuge in the short end of the UF curve (up to 1.5-year duration) to take advantage of upcoming accruals, with a market that is unhurried and waiting for opportunities, but attentive to emerging signals.  

This week, at the April Monetary Policy Meeting (MPM), the Central Bank’s Board agreed to keep the monetary policy rate at 4.5% once again. The decision was adopted unanimously by its members, but we sense that something has changed… The statement shows a largely upward bias, driven by an expected 1.4% increase in the April CPI (some estimates even point to 1.6–1.8%). This figure represents a significant adjustment, tripling the average of 0.5%, along with annual projections that anticipate greater inflationary pressures in the medium term. 

In short, the groundwork is being laid for a possible future evolution of the TPM, but, according to the Council, this will be assessed on a meeting-by-meeting basis depending on how events unfold.

Víctor Valenzuela 
Domestic Fixed Income Trader and Money Market Broker, Fynsa