Chile Cenbank's Naudon: There was global uncertainty before Iran

Chile Cenbank's Naudon: There was global uncertainty before Iran

Chile’s Central Bank Official Highlights Persistent Global Uncertainty Amid Economic Recovery

Chile’s Central Bank advisor Alberto Naudon emphasized that global uncertainty remained a significant factor in 2025, even before recent geopolitical tensions in Iran, as the economy navigated a complex mix of domestic resilience and external risks. In a speech earlier this year, Naudon noted that while Chile’s economy outperformed initial expectations in 2025—driven by robust investment in mining and energy and stronger-than-anticipated growth—the global environment remained volatile, with high interest rates and geopolitical risks persisting according to the BIS review.

The Central Bank’s assessment of inflation and monetary policy in 2025 reflected this uncertainty. Although inflation gradually declined toward the 3% target, Naudon highlighted that the path was uneven, with services inflation proving more persistent than goods inflation. By year-end, the Bank projected inflation would stabilize at target levels in early 2026, supported by a stronger currency and easing external cost pressures.

Recent data align with this outlook. Chile’s economic activity grew 0.2% in January 2026, according to the central bank’s Imacec index, though annual growth remained subdued at -0.1% according to Bloomberg data. Mining output rebounded 1.2% monthly, while services expanded 0.8%, offsetting a 0.4% decline in industrial activity. Investors now anticipate a 25-basis-point rate cut at the March 24 policy meeting, as inflation remains below target and business confidence strengthens under the incoming government of President-elect José Antonio Kast according to Bloomberg analysis.

Naudon’s earlier warnings about global uncertainty have proven prescient. The recent escalation of tensions involving Iran has reignited concerns over oil prices and inflationary pressures, particularly for Chile, which relies heavily on imported fuels according to Bloomberg reporting. While the Central Bank has normalized policy rates to a neutral stance, Naudon stressed in 2025 that external shocks—such as trade tensions, geopolitical conflicts, and China’s economic trajectory—could disrupt progress as noted in the BIS review.

As Chile enters 2026, the central bank faces the challenge of balancing domestic recovery with lingering global risks. Naudon’s remarks underscore the need for cautious policy adjustments amid an environment where uncertainty remains a defining feature.