(Updates with rates decision, central bank comments)
By Anthony Esposito
SANTIAGO, June 12 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