* Key interest rate seen holding at 5 percent in coming months * CPI surprisingly fell 0.5 percent in November * Consumer price fall is steepest monthly decline in 3 years * Inflation in 12 months to November is 2.1 percent * Chile has first trade surplus after four monthly deficits By Antonio De la Jara and Anthony Esposito and Felipe Iturrieta SANTIAGO, Dec 7 (Reuters) - Chile's consumer price index unexpectedly fell 0.5 percent in November, far below market expectations, prompting Finance Minister Felipe Larrain to say on Friday it allows for "tranquility" in terms of monetary policy. The key interest rate has stayed on hold at 5.0 percent since a cut in January largely because the world's No. 1 copper producer has shown better-than-expected resilience to slowing demand from top trade partner China and fallout from the euro zone's crisis. "We have a particularly positive situation and I think that allows for more tranquility in terms of monetary policy," Larrain told reporters after the monthly CPI posted its steepest decline in three years. The CPI dropped chiefly due to lower prices for transport, food and non-alcoholic beverages, the INE statistics agency reported earlier Friday. November's tumble in consumer price was steeper than forecast by all of the 11 analysts and economists surveyed in a Reuters poll. The range of their estimates went from a fall of 0.3 percent to an increase of 0.4 percent, with the median estimate at zero. Easing inflation comes as a relief for the bank after a surprisingly high 0.6 percent rise in October CPI and stronger-than-expected 0.8 percent increase in September, which were fueled in part by robust domestic demand. "This drop in the monthly CPI confirms the central bank's neutral monetary policy stance and makes an interest rate hike more unlikely for now," said Hernan Jimenez, analyst at Forex Chile in Santiago. Worldwide, standard monetary policy is for a central bank to raise interest rates to cool inflation but lower them to spur economic growth, if the latter takes priority over inflationary concerns. Chile's central bank is seen holding its rates at 5.0 percent again at its monetary policy meeting on Dec. 13, and it is seen at that level in three and six months, the bank's last fortnightly poll of traders showed. Strong domestic demand and investments have also boosted Chile's economic growth. Larrain said on Wednesday he expected the small, export-dependent economy to expand about 5.5 percent this year, adding he doesn't see it overheating. Core inflation, which excludes fruits, fresh vegetables and fuel, was minus 0.2 percent in November, the biggest decline since a 0.2 percent decline in August. In October the core CPI rose 0.2 percent. Overall, consumer prices rose 2.1 percent in the 12 months to November, well below the 3.0 percent midpoint of the central bank's policy inflation target range. Annual inflation will likely end the year around 2 percent, Larrain said, echoing central bank president Rodrigo Vergara's comments in an interview with local newspaper El Mercurio published on Sunday. Nearby, Brazil's inflation accelerated more than expected in November after transportation and electricity prices spiked, suggesting the central bank ran out of leeway to further cut borrowing costs. FIRST TRADE SURPLUS IN FIVE MONTHS Chile posted its first monthly trade surplus in November after four consecutive deficits, as lower imports countered a drop in key copper export revenue, central bank data also showed on Friday. The surplus grew to $562 million in November after a downwardly revised $411 million deficit in October and $287 million surplus in November 2011, according to central bank data. The bank had previously reported a $70 million surplus for October. Exports totaled about $6.674 billion in November, while imports were about $6.112 billion. Both figures were down compared with October and November 2011. "The external situation is affecting us and that is reflected in exports. The value (of exports) have fallen in some cases because export prices have dropped, but volumes have as well," Larrain said. Exports are closely monitored in Chile, which is largely dependent on sales of copper, wood pulp, fruit and salmon. Chile accumulated a $2.702 billion trade surplus in the January to November period, central bank data showed. The country ended 2011 with a $10.792 billion surplus. COPPER EXPORT REVENUE DOWN Chile's copper export revenue totaled $3.859 billion in November, versus a previously reported $4.440 billion in October, the central bank said. Export revenue from the metal was $3.712 billion in November of last year. Copper prices rose to their highest level in more than five weeks in late November, supported by a weak dollar and growing confidence in the economic outlook for top consumer China. Chile, which produces roughly a third of the world's copper, is struggling with stubbornly dwindling ore grades in many of its aging, tired deposits though new and expanded deposits have helped increase output this year.