BofA sees Chile rates on hold at 4.5% through 2026

Chile is signaling a classic disinflation-with-growth-scarcity setup: inflation is behaving better than activity, which keeps the policy path constrained even if the central bank would prefer to ease. That matters because the market is likely underestimating how sticky real rates can stay when unemployment is rising and output is flat; the bigger risk is not a sudden hawkish pivot, but a prolonged hold that keeps domestic demand and credit creation subdued for multiple quarters.

The second-order winner is not Chilean consumers so much as external exporters with pricing power into a slower-growth, lower-inflation economy. Copper-linked exposures are the cleaner beneficiary than broad Chile equities: if reforms and metals support do lift growth into 2027, the upside accrues first to miners, port/logistics volumes, and FX-sensitive balance sheets, while rate-sensitive domestic retail, banks, and construction lag.

The market may also be missing that the fuel shock appears to be washing through with limited second-round effects so far, which reduces the urgency for policy tightening but also caps the inflation-beta trade. That creates a window where local duration can rally on soft data, but the asymmetry fades fast if imported energy reaccelerates or if labor weakness turns into a wage spiral. The key catalyst over the next 1-3 months is whether activity data confirms stagnation; over 6-12 months, the decisive variable is copper and China demand, not headline inflation prints.

Contrarian view: the consensus may be too complacent on how long 4.5% can remain restrictive in a weak-growth environment. If inflation stays near target while unemployment keeps drifting higher, the central bank could be forced into earlier easing than BofA expects, which would re-rate local financials and housing-sensitive names quickly.