UPDATE 3-Chile central bank chief says no haste on peso

(Adds further central bank comment on speculators)

SANTIAGO, March 18 (Reuters) - Chilean Central Bank President Jose De Gregorio said on Tuesday the institution would avoid hasty action to combat the rapid appreciation of the peso against the dollar, but did not discard future intervention.

"Not acting is in itself a monetary policy decision that is justified under present conditions and which can change as local and global economic conditions evolve," De Gregorio told Chile's Lower House, or Chamber of Deputies.

Chile's peso is close to an 11-year high against the dollar, buoyed by extended, soaring copper prices and a widening differential between interest rates in Chile and the United States.

"We cannot discard an intervention in the exchange rate in the event that there is a disalignment that threatens the stability of the economy, in the event where we feel an intervention would be effective," De Gregorio told legislators, who are demanding relief for Chileans suffering from the strong peso.

With the currency one of the fastest rising against the dollar this year, legislators demanded action on Tuesday from the central bank chief and warned that no action could be harmful.

"Where is the pilot here," one legislator said ahead of De Gregorio's speech to federal deputies. "We have a serious problem here ... We need a flight plan."

The peso has gained more than 14 percent against the dollar this year, among the strongest gains of any Latin American currency this year against the greenback.

Hardest hit by Chile's powerful currency have been farmers, who export most of their fruits and vegetables to buyers who pay in dollars.

With the weaker dollar, the revenues don't go as far as they once did in paying peso-denominated costs like labor.

The currency CHILJCLP=CL strengthened 0.60 percent on Tuesday to close at 431.20/431.50 per dollar, compared with the prior session's close at 433.80/434.10.

Chile's central bank has raised its benchmark rate to 6.25 percent to control inflation, while the Fed has lowered rates to try to jump-start the weak economy.

The U.S. Federal Reserve slashed U.S. interest rates on Tuesday by three-quarters of a percentage point, taking the benchmark overnight rate down to 2.25 percent, the lowest since February 2005.

After nearly three hours of debate with congressmen, De Gregorio said the monetary policy scenario was extremely complex, involving fundamental local and global factors.

"We have not discounted any measure, but neither will we encourage speculation among those who are taking positions thinking that in the end the central bank is going to rescue them, that the central bank will intervene," he said in a rebuttal. (Reporting by Pav Jordan, Rodrigo Martinez and Antonio de la Jara; Editing by Andre Grenon/Jeffrey Benkoe)