UPDATE 1-Chile central bank cuts 2016 growth view, sees more rate hikes

lunes 6 de junio de 2016 12:17 GYT
 

(Adds central bank comments, context)

By Anthony Esposito and Antonio De la Jara

SANTIAGO, June 6 (Reuters) - Chile's central bank on Monday lowered its economic growth forecast for 2016 due to weakness in the key mining sector and a drop in investments, adding that any hikes to the benchmark interest rate would occur at a somewhat slower pace than previously thought.

The bank, in its quarterly Monetary Policy Report (IPoM), cut its 2016 gross domestic product growth projection to a range of 1.25-2.0 percent from a previous view of 1.25-2.25 percent. It left its forecast for 2017 economic growth unchanged at 2.0-3.0 percent.

"We expect the economy to continue growing below its potential for a few more quarters, impacted in particular by the weak performance of those sectors most dependent on investment ... The process of normalization for economic growth will be slow," said the bank.

Policymakers said they were "concerned" about the evolution of investment, especially weakness in the mining sector.

For this year, different indicators point to another drop in investment, with a recovery in non-mining investment seen towards 2017, said the bank.

Cooling demand in top metals consumer China has led to a rout in the copper market and crimped investment in Chile, the world's top copper producer.

On the benchmark interest rate, the bank said it "will continue normalizing the monetary policy rate within the (two-year) policy horizon, in line with the forecasts for the economy during that period, but at a somewhat slower pace than what we considered in March.   Continuación...