Chile central bank seen keeping key rate pat again on Thursday
SANTIAGO Oct 17 (Reuters) - Chile's central bank was poised to keep its key interest rate on hold again at 5 percent on Thursday, as a tight labor market and buoyant consumer spending were seen deferring a cut to stimulate the Andean country's slowing economy.
While copper-dependent Chile's robust pace of growth is moderately easing on the back of cooling investment and exports, expectations of an imminent rate cut have been pushed back after recent upbeat data.
Economic activity grew a robust 4.1 percent in August compared with a year earlier, buoyed by the dynamic retail and key mining sector, while unemployment hovered near multi-year lows.
Few in the market expected the bank on Thursday would break the wait-and-see position it has adopted since a cut to its key rate in January 2012.
"The central bank is now almost at the edge, ready to lower the reference rate. Nevertheless, we continue to believe that directors would need to see a triggering factor ... to break the inertia and finally cut the policy rate," Goldman Sachs said in a note to clients.
"In the absence of these sorts of catalysts, and given the still solid real activity data, directors are more likely to validate the market's very short-term expectations for a stable policy rate."
Analysts polled by the central bank forecasted the rate will be kept steady on Thursday and in November, but will be cut by 25 basis points in December.
Traders also polled by the bank expected it to go through with its widely expected 25 basis point cut within three months to stimulate growth.
The central bank sees Chile's economy expanding between 4 and 4.5 percent this year, down from 5.6 percent in 2012.
Chile's current wait-and-see stance contrasts with more dynamic monetary policy in some other Latin American countries.
Regional powerhouse Brazil's central bank raised its benchmark Selic interest rate for the fifth straight time last week, keeping the pace of rate hikes steady and giving no signs it was ready to end monetary tightening to battle high inflation.
Farther north in Mexico, the central bank has cut its benchmark interest rate twice this year to a historic low of 3.75 percent in a bid to boost sagging growth in Latin America's No.2 economy.
Chile's central bank will announce its decision on rates at 2100 GMT on Thursday.
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