UPDATE 1-Chile central bank will likely downgrade growth forecast

jueves 20 de marzo de 2014 10:43 GYT

(Adds bank's comments, background details)

SANTIAGO, March 20 (Reuters) - Chile's central bank will likely downwardly revise its economic growth projections for 2014 as activity and domestic demand have slowed more than anticipated, bank president Rodrigo Vergara said in prepared remarks on Thursday.

The bank had forecast in December in its last quarterly Monetary Policy Report (IPoM) that Chile's economy would expand between 3.75 and 4.75 percent in 2014.

Since then data has shown the economy in the fourth quarter grew at its weakest pace since early 2010, when a massive earthquake devastated the world's top copper producer. Full-year 2013 growth was 4.1 percent, the lowest since Chile's economy fell into a recession in 2009.

The next IPoM will be published at the end of March.

However, during the year, growth should accelerate, Vergara said.

Faced with stalling growth and cooling domestic demand, especially in investment, the bank has cut the key interest rate by 100 basis points to 4.0 percent since October in an attempt to stimulate the economy.

Vergara reiterated that the bank's board "will consider the possibility of making additional cuts to the policy rate in line with the evolution of domestic and external macroeconomic conditions and its implications on the inflationary outlook."

The silver lining to reduced domestic activity has been a softer current account deficit, Vergara pointed out.   Continuación...