Chile central bank seen holding benchmark rate at 5 percent

Tue Nov 13, 2012 8:29am EST

* Bank seen holding fire for 10th consecutive month
    * Strong domestic activity offsets global threats
    * Chile's economy easing more slowly than forecast
    * Several Latin American central banks holding rates

    SANTIAGO, Nov 13 (Reuters) - Chile's central bank is seen
holding its benchmark interest rate steady at 5.0 percent for a
tenth straight month later on Tuesday as robust local economic
growth offsets looming risks from a slowdown in global demand. 
    Rates have stayed on hold since a cut in
January largely because the world's No. 1 copper producer has
shown better-than-expected resilience to slowing demand from top
trade partner China and fallout from the euro zone's crisis. 
    Chile's export-dependent economy this year may post growth
of slightly more than the official forecast of 5 percent,
Finance Minister Felipe Larrain told Reuters last week, but he
kept to a growth outlook for 2013 of 4.8 percent, noting that
Chile faces slowing exports to Europe. 
    "Altogether, domestic and external risks to activity and
inflation continue to broadly offset each other and this
condition underpins our call for no monetary policy action for
the foreseeable future," Goldman Sachs economist Alberto Ramos
said in a note to clients. 
    "The domestic economy continues to expand at a remarkably
solid pace, despite the challenging global backdrop, with demand
failing to decelerate to the originally envisaged more moderate
pace during (the second half of the year)," Ramos added.
     Chile's central bank board will release its post-meeting
statement at 6 p.m. (2100 GMT) on Tuesday. At that point
analysts will scour for any comments on the peso currency, last
month's surprisingly high inflation, firm domestic demand, and
any indications of a change in the bank's neutral stance on
interest rates.
     Chile's benchmark interest rate is seen at 5.0 percent in
five and 11 months, the bank's latest poll of analysts showed on
Monday. 
 
    Chile's central bank said last week it will launch a
temporary program to boost the liquidity of the country's peso
 in financial markets to "mitigate possible tensions
towards year-end".
    Chile's consumer prices rose by double what the market
expected in October, chiefly due to the cost of food,
non-alcoholic beverages, housing and electricity, the government
said last week. 
             
    LATIN AMERICAN CENTRAL BANKS RATES HELD
    Chile's central bank isn't the only one expected to hold its
fire in the region. 
    Brazil's central bank will likely keep interest rates at
their current record low of 7.25 percent until at least the end
of next year to help support a sluggish economic recovery, a
weekly central bank survey of economists showed on Monday.
 
    Colombia's central bank kept its benchmark interest rate
steady for a second-month running at 4.75 percent at its latest
meeting on Oct. 26, given a mixed picture for domestic growth
and the global economy. 
    Peru's central bank held its benchmark interest rate steady
at 4.25 percent for the 18th month in a row last week, as
inflation has retreated and the economy grows near its
potential.
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