* Jobless rate falls amid gradual economic recovery
* Central bank weighed 25 bps rate rise in May
* Peso unfazed by data amid U.S. holiday
SANTIAGO, May 31 (Reuters) - Chile’s February-April jobless rate fell unexpectedly to 8.6 percent amid a gradual economic recovery, despite the impact of a massive earthquake, data showed on Monday, as the central bank mulled raising its key rate last month.
The jobless rate CLUNR=ECI for the rolling three-month period was well below market expectations for 9.3 percent and the 9.0 percent calculated for the January-March period, data released by state statistics agency, INE, showed.
“Although employment in fishing and agriculture fell, as expected because of seasonal reasons and the impact of the earthquake, it rose in other areas of activity, more than compensating,” the INE said.
It said employment figures could be expected to improve in coming readings as activity recovered in areas of south-central Chile hit by the Feb. 27 quake that killed hundreds of people.
Separately, Chile’s central bank said it considered raising its key rate by 25 basis points in May, but board members voted unanimously to hold the rate steady, citing turbulence in Europe and domestic inflation, minutes showed on Monday.
The bank is widely expected to raise its benchmark rate from its historic low of 0.5 percent, set in mid-2009, in June, joining a regional tightening cycle led by Brazil and Peru. For more, see [ID:nN14183253]
Board members began their May 13 rate-setting meeting with the assumption that monetary policy was highly expansionary, and that it would need to start reducing that element in the short term to meet its inflation targets.
“All of the board members agreed that the news of the past month were marked by problems in Greece and its implications for Europe and the rest of the world, agreeing that the repercussions for Chile were limited,” the bank’s minutes said.
One board member cautioned that speeding up the pace of rate normalization amid a more complex inflation scenario would be negative but saw a chance that holding back at May’s meeting could mean the board would have to consider a 50-basis point increase the following month.
The bank, which cut its 2010 growth estimate to a range of 4.25 percent to 5.25 percent after the quake, said in its May 13 interest rate decision announcement that the time to normalize monetary policy was drawing near, signaling an increase is imminent.
The minutes showed all board members agreed that the time to start monetary policy normalization was near.
Chile’s industry output shrank a seasonally-adjusted 0.9 percent in April, excluding the impact of a huge earthquake, data showed last week, but strong consumer demand fueling a recovery was seen confirming a likely June rate increase. For more, see [ID:nN28143689] (Reporting by Antonio de la Jara; Writing by Simon Gardner; Editing by Padraic Cassidy)
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