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SANTIAGO, Aug 28 (Reuters) - Chile’s central bank considered the option of raising the benchmark interest rate at its last monetary policy meeting in August, the first time this year that worries over persistently high inflation have led it to eye that possibility.
But the decision to hold the rate at 3.0 percent was unanimous as the economy remains sluggish, minutes from the meeting showed on Friday.
Gross domestic product in Chile, the world’s top copper exporter, grew 1.9 percent last year, a five-year low.
Annual inflation, however, has consistently come in above the bank’s target 2 percent to 4 percent range, wedging central bankers uncomfortably between high inflation and low growth.
The option of raising the rate 25 basis points was intended to prevent “a possible de-anchoring of inflation expectations”, the minutes said.
But controlled medium-term inflation projections and continued slow growth despite tepid signs of recovery led the bank to hold the rate steady, as it has done since October.
“On the domestic front, several board members noted that incoming data reflected some progress after several disappointing months, but they still showed no signs of regaining significant dynamism,” the minutes read.
Most analysts expected the bank to keep the rate on hold at 3.0 percent for the rest of the year in an August poll. (Reporting by Gram Slattery; Editing by Meredith Mazzilli)