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SANTIAGO, Aug 13 (Reuters) - Chile’s central bank, as expected, held the benchmark interest rate for a tenth month at 3 percent as it continues to monitor persistently high inflation.
After briefly slowing to the upper end of the central bank’s 2 percent to 4 percent tolerance range in May, annual inflation has again accelerated, reaching 4.6 percent in July.
“Domestically, annual CPI variation is still above 4 percent and is expected to stay in that level for longer than previously thought ... The evolution of inflation expectations will continue to be monitored with special attention,” the bank said in its post-meeting statement.
It retained its neutral bias on future policy.
The bank has maintained the interest rate at 3 percent since October, caught between a weak economy and fears of fanning inflation.
Chile’s economic activity has been slow to recover from a five-year low in 2014.
Last week, the International Monetary Fund cut its 2015 economic growth forecast for the world’s top copper exporter to 2.5 percent from a previous forecast of 2.7 percent, citing both external headwinds and uncertainty created by government reforms.
“Output and demand continue to be weaker than assumed in the Monetary Policy Report’s baseline scenario, and private growth expectations for this and next year dropped further,” the bank said, adding that confidence indicators have soured.
Reporting by Santiago bureau; Writing by Anthony Esposito; Editing by Jonathan Oatis and Alan Crosby