UPDATE 1-Chile cenbank holds key rate steady, will monitor inflation
(Updates with rates decision, central bank comments)
By Anthony Esposito
SANTIAGO, June 12 (Reuters) - Chile's central bank opted to keep its key interest rate unchanged for a third straight month on Thursday, as expected, and said it will monitor consumer prices after a recent surge pushed annual inflation to levels not seen in over five years.
The bank repeated in its post-meeting statement that it will consider future rate cuts depending on the evolution of domestic and external macroeconomic conditions and implications on the inflation outlook.
The bank said the most likely scenario is that the rise in inflation will be temporary, but underscored that it will be monitoring the situation with "special attention."
"Local economic indicators confirm the low dynamism of output and demand. The drop in investment was compounded by a slowdown in private consumption," the bank said.
Its five-member board previously cut the key interest rate by 100 basis points to 4.0 percent between October and March to help boost ebbing economic growth in the world's top copper producer.
But since then it has left the rate unchanged as inflationary pressures built up, owing in large part to the peso currency's sharp depreciation, pushing the 12-month reading above the bank's 2 percent to 4 percent target.
All 17 economists and analysts surveyed by Reuters prior to the monetary policy meeting said they expected the bank to keep the rate on hold this month.
In two separate central bank polls released earlier this week, traders and analysts also overwhelmingly said they expected the rate to stay unchanged on Thursday.
But traders polled predicted a cut to 3.75 percent within three months, while analysts saw the rate falling to that level in five months.
Finance Minister Alberto Arenas has shrugged off the spike in prices, telling Reuters last month it did "not at all" create a dilemma for the bank when setting the interest rate. (Reporting by Anthony Esposito; Editing by Andrew Hay and Eric Walsh)
- Alabama man gets $1,000 in police settlement, his lawyers get $459,000
- Probe: Athletes took fake classes at University of North Carolina
- Canada's Harper vows tighter security after Parliament attack |
- Some U.S. hospitals weigh withholding care to Ebola patients
- Man arrested after jumping White House fence, causing lockdown