Chile central bank ups GDP growth view, cuts inflation forecast

SANTIAGO, Sept 5 (Reuters) - Chile's central bank on Wednesday raised its 2012 economic growth view and cut its inflation projection, adding the forecasts rested on the assumption of no short-term changes in the bank's benchmark interest rate of 5.0 percent.

The bank saw 2012 economic expansion at between 4.75 percent and 5.25 percent in its much awaited quarterly Monetary Policy Report (IPoM).

That is above the 4 percent to 5 percent economic growth range projected in the last IPoM, issued three months ago.

The bank's IPoM also cut its 2012 inflation expectations to 2.5 percent from its previous 2.7 percent view.

Chile has been prepping its small, export-dependent economy for a slowdown on the back of ebbing global demand, but the country's brisk domestic demand, tight labor market and robust economic activity have so far proven more resilient than expected.

Next year, growth in the world's No. 1 copper producer is seen slowing to between 4 percent and 5 percent and inflation is expected to pick up to around 3 percent, which is the midpoint of its target range, the bank's IPoM report said.

The bank said it considered that the Chilean peso's real exchange rate was ranging on the low end of levels consistent with its long-term fundamentals.

The real exchange rate is a measure used by the central bank in part to gauge Chilean exports' competitiveness. The peso has strengthened about 8 percent against the U.S. dollar this year.