That compared with a previous growth estimate of 1.5 percent to 2.5 percent.
"Recent data suggest that the speed of (growth) recovery will be somewhat slower than expected," the bank said in its quarterly monetary policy report.
"That, together with some recent events that have considerably stifled mining activity, will reduce annual GDP growth in 2017."
The bank said the 43-day-long strike at BHP Billiton Plc-owned Escondida, which ended without a clear resolution in March, would take an entire percentage point off growth in the first quarter.
Escondida produced over 1 million tonnes of copper last year, about 5 percent of the world's total, and significantly more than any other individual deposit.
Outside of the strike, persistently weak economic activity and investment in Chile has already led the bank to cut interest rates 50 basis points so far this year.
"The base case assumes that the monetary policy rate will continue to be expansive," central bank head Mario Marcel said in a speech to senators on Monday as he presented the report.
The bank maintained its previous forecast for year-end 2017 inflation of 2.9 percent, and said 2018 inflation would rise slightly, to 3.0 percent.
It also made its first projection for 2018 GDP growth, forecasting it would rebound to 2.25 percent to 3.25 percent.
Copper prices, the bank estimated, would likely average $2.55 per pound in 2017 and $2.50 in 2018. Last week, Chilean state-owned copper giant Codelco predicted copper prices would be between $2.20 and $2.40 per pound this year.