* Bank opts for third consecutive 50 basis point rise
* Bank cites uncertainty over pace of global recovery
* Analysts divided on size of future rate hikes
(Updates with central bank comment)
SANTIAGO, Aug 12 Chile's central bank raised
its benchmark rate CLINTR=ECI by 50 basis points to 2.0
percent on Thursday, as expected, a third consecutive monthly
increase as the economy rebounds from a huge earthquake.
The bank is seeking to counter strong demand pressure after
the economy expanded more than expected in June and as consumer
prices rise on a recovery from the February quake and the
global financial crisis.
The bank said domestic demand and activity were more
dynamic than seen in the bank's last monetary policy report in
June, and that it would continue to withdraw monetary stimulus
pending external and domestic macroeconomic conditions.
"Uncertainty has increased over the pace of the recovery of
global activity and volatility in financial markets remains
high," the bank said in a statement.
"Prices of basic goods continue to be high. Overall, the
external context faced by the Chilean economy continues to be
favorable," the bank added.
Chile joined Brazil and Peru in a regional monetary
tightening cycle in June, after holding its benchmark rate at a
record low in the wake of the global financial crisis and then
the devastating Feb. 27 quake.
The rate increase is expected to continue to boost the
peso, which rose to new 5-month highs on Thursday, prompting
President Sebastian Pinera to warn the government would take
all necessary measures to keep the currency competitive.
Chile's comparatively higher rates are expected to attract
foreign capital and strengthen the peso, at a time when many of
the world's leading economies are keeping interest rates at
historic lows. For more, see [ID:nN12124343]
Interest rate futures point to a year-end monetary policy
rate of 3.75 percent, but analysts are divided about the pace
at which the bank will hike. For a snap analysis, see
Chilean consumer prices rose 0.6 percent in July, slightly
below market forecasts, while the economy grew more than
expected in June though the pace of recovery from the quake is
slowing, data showed last week. [ID:nN06212120]
(Reporting by Alonso Soto, Brad Haynes, Molly Rosbach, Antonio
de la Jara, Fabian Cambero; Editing by Simon Gardner and Paul