UPDATE 1-Chile central bank holds key rate steady at 3 pct
(Adds central bank's and analyst's comments, background)
SANTIAGO May 14 (Reuters) - Chile's central bank held the country's benchmark interest rate at 3.0 percent on Thursday for the seventh straight month, as expected, maintaining its neutral bias and saying it would keep a vigilant eye on stubbornly high inflation.
Annual inflation has remained above the central bank's 2 percent to 4 percent target range for over 13 months. Analysts and traders polled by the bank see it easing to around the midpoint of the target range within a year's time.
The bank slashed the key rate 200 basis points between October 2013 and October 2014 to stimulate a flagging economy, but signs of a nascent recovery and above-target inflation has since stayed its hand.
In its post-meeting statement, the bank said it would continue monitoring inflation with "special attention."
Central Bank President Rodrigo Vergara said on April 1 that the bank's operating assumption was that it would raise the benchmark interest rate toward the end of 2015 or the start of next year.
"Though the economy still shows signs of weakness, high inflation and surprises on the upside regarding inflation reduce the possibility of new rate cuts," Santander Chile said in a research note to clients after the announcement.
"Considering this we forecast the monetary policy rate will remain unchanged throughout the rest of the year." (Reporting by Anthony Esposito and Rosalba O'Brien; , editing by G Crosse and Ted Botha)
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