M1 remains above year-ago levels despite a recent pullback
Recent dynamics
Chile's M1 stock stood at approximately CLP 60.4 trillion in January 2025. It moved within a relatively narrow range through the first half of the year, reaching about CLP 61.7 trillion in May before easing to CLP 61.0 trillion in June and recovering to approximately CLP 61.5 trillion in July.
The second half of 2025 remained uneven. M1 fluctuated around CLP 60.6–62.1 trillion between August and November, then increased sharply to approximately CLP 64.6 trillion in December. This left the aggregate materially above its level at the beginning of the year.
During 2026, M1 initially eased to approximately CLP 63.9 trillion in January before rising steadily through the following months. The stock reached CLP 64.8 trillion in March, CLP 65.7 trillion in April, and a period high of approximately CLP 67.0 trillion in May. The latest two observations reversed part of that increase, with M1 declining to CLP 65.3 trillion in June and CLP 64.3 trillion in July.
Compared with July 2025, M1 increased from approximately CLP 61.5 trillion to CLP 64.3 trillion. This represents an increase of roughly CLP 2.8 trillion, equivalent to annual growth of approximately 4.6%.
Interpretation and economic signal
The current M1 profile shows two simultaneous signals. On a year-over-year basis, highly liquid monetary balances remain larger than they were twelve months earlier. On a shorter horizon, however, the decline from the May peak indicates that recent momentum has softened after the strong increase recorded earlier in 2026.
This distinction matters because M1 is a relatively narrow monetary aggregate and is more closely linked to balances available for transactions and immediate liquidity than broader measures of money. A sustained acceleration in M1 can be consistent with stronger nominal liquidity, while a persistent decline can indicate that the expansion of the most liquid balances is losing momentum.
The latest data do not yet point to an annual contraction. M1 in July 2026 remains about 4.6% above its level one year earlier. Nevertheless, the stock is roughly 3.9% below the May 2026 peak, making the recent pullback relevant when assessing the direction of short-term monetary liquidity.
Because M1 is measured in nominal pesos, positive nominal growth does not automatically imply an equivalent increase in real liquidity. The inflation-adjusted signal depends on how M1 growth compares with the change in the general price level over the same period.
M1 should also not be interpreted in isolation as a complete measure of the monetary-policy stance. Changes in transaction balances can reflect shifts in money demand, portfolio allocation, payments behavior and broader financial conditions. The most informative signal therefore comes from combining the annual expansion with the recent sequential weakening.
Conclusion
Chile's M1 money supply stood at approximately CLP 64.3 trillion in July 2026, around 4.6% above its level one year earlier. The annual signal therefore remains positive.
The short-term picture is softer. After reaching approximately CLP 67.0 trillion in May, M1 declined in both June and July and now stands about 3.9% below that recent peak.
The current signal is therefore one of continued annual expansion in narrow money accompanied by weaker recent momentum. A continuation of the decline would strengthen the evidence of cooling in immediate monetary liquidity, while renewed growth would suggest that the May-to-July pullback was temporary.