UPDATE 1-Chilean central bank holds key rate, hints at rate cut
By Anthony Esposito SANTIAGO, Sept 12 (Reuters) - Chile's central bank held its key benchmark interest rate steady on Thursday for the 20th consecutive month after a recent rash of upbeat economic data but said a cut was possible in coming months on expectations of a slowdown in growth and consumption. Forecasts for an imminent rate cut have been scaled back after unemployment hit a low not seen in years in May to July and manufacturing production posted a surprise bounce in July, along with retail sales. "Domestically, recent output and demand figures continue along the lines of previous months: moderate growth in output and strong private consumption," the central bank said in its post-meeting statement. Consumer prices, a mainstay of central bank concerns, have remained near the bottom end of its 2 to 4 percent target range. "Inflation expectations have remained near the target in the policy horizon," it said. For a third meeting in a row, the bank said a rate cut in the near term was possible. "The consolidation of the trends outlined in the last Monetary Policy Report could call for adjustments to the monetary policy interest rate in the coming months," the bank said On September 4, the bank lowered its GDP forecast for this year to a range of between 4 and 4.5 percent this, compared to a prior projection of between 4 and 5 percent. Analysts surveyed by Chile's central bank before Thursday's decision forecast the rate would remain at 5.0 percent through October, and then be cut by 50 basis points within five months. Chile's wait-and-see stance compares with rate hikes in emerging markets like Brazil, where the rate was increased to a 16-month high of 9 percent in late August to ease inflationary fears after the local currency plunged in value. Meanwhile in Mexico, the central bank unexpectedly lowered borrowing costs last week to counter a slump in growth, keeping the door open to a further cut and leaving the weak peso vulnerable if the United States starts to unwind stimulus.
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