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Chile jobless rate falls, interest rate seen neutral
SANTIAGO (Reuters) - Chile's jobless rate surprisingly inched down to near-historic lows, the government said on Friday, helped by a growth in civil servant and military jobs, and tourism-related employment.
The data provided more evidence that, with a tight labor market, the central bank, would have less grounds to cut its benchmark 5 percent interest rate, kept pat on August 16 for the seventh consecutive month.
On Friday, the central bank board also released minutes of that meeting, which said they took note of firm economic growth, a tight labor market and domestic demand counter balancing an uncertain external backdrop, minutes said.
Board members voted to unanimously to keep the benchmark rate at 5 percent, a level which they said they considered neutral. In standard monetary policy parlance, a neutral interest rate neither spurs or curbs economic growth, all other factors being equal.
Chile's National Statistics Institute said also on Friday the country's jobless rate for the May to July period posted a surprise fall to 6.5 percent, dipping from the second-quarter unemployment rate of 6.6 percent and approaching historic lows..
"The biggest increases in jobs were observed in public administration and defense - linked with a low base of comparison - hotels and restaurants, as well as transport and communications," the statistics agency said in its report.
The median estimate of 10 analysts and economists polled by Reuters had forecast the May to July rate would edge up slightly to 6.7 percent.
Chile's jobless rate for the December-February period was d 6.4 percent, representing a near five-year low, after a similar 6.4 percent rate posted in July 2007, which was calculated by the government using a different methodology.
STRONG PESO HIGHLIGHTED
In the minutes, all five central bank board members highlighted the strong peso.
"One director suggested that the buoyancy of the domestic (economy) may have resulted in currency appreciation instead of inflationary pressures. Another director suggested that the Chilean peso will likely remain strong while favorable external financing conditions persist," Alberto Ramos, economist at Goldman Sachs, said in a note to clients.
The Chilean peso has strengthened about 8 percent against the dollar since the beginning of the year and was trading about 0.24 percent stronger in Friday morning trade.
(Reporting by Moises Avila & Anthony Esposito Editing by W Simon)
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