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UPDATE 1-Chile cbank weighed only rate hold in September-minutes
October 3, 2012 / 12:30 PM / in 5 years

UPDATE 1-Chile cbank weighed only rate hold in September-minutes

* Rate remains within a neutral range-cbank minutes
    * Decision to hold key rate was unanimous
    * Cbank to monitor rise in current account deficit


    SANTIAGO, Oct 3 (Reuters) - Chile's central bank considered
only keeping its key interest rate on hold as an option in
September, when it held it steady at 5.0 percent for an eighth
consecutive month, as expected, minutes of the meeting showed on
Wednesday.
    The rate remains within a neutral range and the decision to
keep the rate steady was unanimous, the minutes said.
    The bank held its key interest rate steady in September as
healthy economic growth and demand at home counterbalance an
unwelcome global backdrop. 
    The central bank highlighted that an expected domestic
economic slowdown had thus far been softer than anticipated and
expressed concern about a recent rise in Chile's current account
deficit.
    "The increase in domestic consumption has been reflected in
a rise in the current account deficit. Were (this rise) to
persist and grow, it could be a point of economic and financial
vulnerability amid sharp drops in the terms of trade or a
reduction in the supply of international financing," the minutes
said.  The monetary authority said it would continue to monitor
this situation.
    Chile, the world's top copper producer, posted its largest
trade deficit in August since the height of the global financial
crisis nearly four years ago, as exports of the metal slipped
below the $3.0 billion mark for the first time since June 2010. 
 
    One bank board member pointed out the Chilean peso's real
appreciation had picked up in recent weeks, due to "external
events."
    Chile's stronger-than-expected economic performance has
helped the peso appreciate over 9.5 percent versus the
U.S. dollar this year. Along with the Hungarian forint, it ranks
as the strongest performer against the dollar among the 152
currencies tracked by Reuters.
    The central bank may intervene in the foreign exchange
market to stem the peso's strength if such a move is justified,
bank president Rodrigo Vergara said on Friday. 
    Chile's central bank is seen holding its key interest rate
at 5.0 percent again at its monetary policy meeting on October
18, and it is also seen at that level in three and six months,
the bank's fortnightly poll of traders showed last month.
    Chile has proved surprisingly resilient to the euro zone
debt crisis so far this year, but economic growth in the small,
export-dependent country is seen slowing in 2013 on ebbing
global demand.

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