UPDATE 2-Chile central bank holds rate steady for 5th month

* Bank holds rate steady at 0.5 pct for fifth month

* Bank says to hold rate until at least 2nd quarter (Updates with regional comparisons, analyst comment)

By Rodrigo Martinez

SANTIAGO, Dec 15 (Reuters) - Chile's central bank said on Tuesday it held its benchmark interest rate steady at 0.50 percent for a fifth month, as expected, amid a raft of data pointing to a more gradual exit from the country's first recession in a decade.

The bank reiterated it would hold the rate steady at the "minimum" level until at least the second quarter of 2010.

"The board believes the macroeconomic environment is congruous with a monetary policy rate that remains at the minimum level of 0.5 percent until at least the second quarter," the bank said in a statement.

The central bank has slashed its key rate by 775 basis points to record lows since the beginning of the year to spur lending, leading the charge to cut rates in Latin America to counter the impact of the global financial crisis.

Other Latin American central banks have also been holding rates to aid recovery. Mexico's new central bank governor, Agustin Carstens, said last week ahead of his confirmation that Mexican interest rates should be held steady in a sign that policy makers may keep borrowing costs low for some time.

Brazil's central bank kept interest rates at a record low last week, but gave what some economists saw as a first signal it was laying the groundwork for an eventual rise in rates. Brazil was among the first countries to emerge from the global crisis and has fared better than other regional economies.

In its previous statement in November, Chile's central bank had said it would relax complementary stimulus measures and hinted at a more gradual recovery in the economy of the world's top copper producer from the first recession in a decade.

"The overriding central bank concern is that inflation is too low versus the 3 percent target and therefore the bank is still seeking to inflate the economy back to target," said Alberto Ramos, senior economist at Goldman Sachs in New York.

"Hence the removal of the conventional monetary accommodation should not occur before late in Q2 2010, and there is a growing probability that it could be delayed to H2 2010, as real activity is recovering at only a moderate pace."

Chilean financial analysts have trimmed their fourth-quarter economic growth outlook to 1.5 percent and deepened their 2009 full-year gross domestic product outlook to a 1.8 percent contraction, a monthly central bank poll of financial analysts showed this month.

Chile's economy contracted a surprise 0.9 percent in October, central bank data showed this month, a 12th consecutive monthly fall that added to evidence of a slower economic recovery.

The reading was affected by lower industrial output, which was partially offset by an increase in mining, retail commerce, and utilities. The economy is still seen emerging from recession in the fourth quarter.

Chile has injected billions of dollars as part of a stimulus plan to jump-start the economy amid the global slowdown.

The Chilean economy is expected to contract by between 1.5 and 2 percent this year, according to the central bank. (With reporting by Antonio de la Jara and Alonso Soto. Writing by Simon Gardner; Editing by Leslie Adler)