September 4, 2018 / 9:56 PM / 3 months ago

UPDATE 1-Chile central bank leaves interest rate at 2.5 pct, as expected

(Adds context of weak peso, trade war and strong domestic economy, bylines)

By Antonio De la Jara and Aislinn Laing

Sept 4 (Reuters) - Chilean central bank policymakers decided unanimously to leave the benchmark interest rate unchanged at 2.5 percent on Tuesday, in line with market expectations.

In a statement accompanying the interest rate decision, the bank referenced as a factor in its deliberations the turbulence in emerging markets, most notably in neighboring Argentina, the fall in the price of copper - Chile’s main export, and also the weakening of the Chilean peso, which has dropped to its lowest against the U.S. dollar in two years.

It said that it had however decided to maintain interest rates given that the economy under the government of centre-right president Sebastian Pinera had been growing at a faster rate than anticipated, and would consider raising them “in the coming months”.

A traders’ poll conducted by the central bank last month suggested the interest rate would rise to 3.25 percent in the next 12 months amid gradually rising inflation.

On Wednesday, the central bank board will present its latest economic projections to Chile’s congress. (Reporting by Antonio de la Jara and Aislinn Laing Editing by James Dalgleish)

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