UPDATE 1-Chile's central bank cuts key rate, says easing helping economy

jueves 11 de septiembre de 2014 18:24 GYT
 

(Recasts with rate decision, central bank's comments)

By Anthony Esposito

SANTIAGO, Sept 11 (Reuters) - Chile's central bank cut its benchmark interest rate for the seventh time since October on Thursday, as forecast, continuing with its easing cycle to bolster a quickly decelerating economy.

The bank reduced the key rate 25 basis points to 3.25 percent and left the door open to possible future rate cuts, but slightly moderated its tone compared with prior post-meeting statements.

"The board will consider the convenience of introducing further monetary stimulus in line with the evolution of domestic and external macroeconomic conditions and its implications on the inflationary outlook," the central bank said.

Its bias had previously said it would "consider the possibility of making additional cuts to the monetary policy rate."

Even though inflation remained above the central bank's 2 to 4 percent target range for the fifth month in a row in August, the rise in consumer prices is seen as a temporary phenomenon linked mostly to the Chilean peso's recent depreciation.

"The most likely scenario continues to assume that inflation will stay above the upper bound of the tolerance range still for some months, to later return to the target. This evolution will continue to be monitored with special attention," the central bank said.

Faced with the reality of a much sharper slowdown than had been anticipated, the bank slashed its 2014 economic growth expectations earlier this month to as little as 1.75 percent, with domestic demand growth seen sliding almost to a halt.   Continuación...