UPDATE 2-Chile's cental bank holds key rate, signals near-term hike
(Adds analyst's comments, graphic) By Anthony Esposito SANTIAGO, Sept 15 (Reuters) - Chile's central bank held its benchmark interest rate at 3 percent on Tuesday, as expected, but said above-target inflation and other economic indicators will likely prompt a tightening of policy in the short term. "The board considers that the convergence of inflation to 3 percent over the (two-year) policy horizon will call for a reduction in the high monetary stimulus currently in place," the bank's post-meeting statement said. "Considering incoming data, it is foreseen that this process will begin shortly," it added, noting it will continue to monitor the evolution of inflation with "special attention." The statement signals a shift in tone as the central bank had said earlier this month that it assumed a scenario in which it would start withdrawing its monetary stimulus at the end of 2015 or early 2016. The bank has kept the main rate at 3 percent since October 2014, caught between a weak economy and fears of fanning stubbornly high inflation. Inflation in Chile posted its biggest monthly jump in nearly a year in August, pushing the annual figure to 5 percent, well above the central bank's target range, ratcheting up pressure on monetary policymakers to hike interest rates sooner rather than later. "The next movements of the monetary policy rate will depend on the upcoming inflation data, though we believe soft domestic (economic) activity and a worsening external scenario cannot be ignored in this analysis," said Banco Santander in a note to clients. (Reporting by Anthony Esposito; Editing by Andrew Hay and Alan Crosby)
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