UPDATE 1-Chile central bank holds rate steady, eyes over-target inflation
(Adds context, bank's comments)
SANTIAGO Nov 18 (Reuters) - Chile's central bank held the benchmark interest rate steady on Tuesday, as widely expected, halting a recent easing cycle in the face of stubbornly high inflation, which it said would remain above its tolerance range for some months.
Over the last year, the bank had cut the interest rate 200 basis points to its current 3.0 percent to tackle a slowdown in Chile's economy.
In its post-meeting statement, the bank reiterated former comments that inflation would, in the most likely scenario, "stay above the upper bound of the tolerance range for some months."
However, comments the bank made in prior months that inflation would later return to target were conspicuously absent. Inflation has surged recently to 5.7 percent, far above the bank's 2 percent to 4 percent target range.
Data released earlier on Tuesday showed a slight quickening of economic growth in the third quarter versus the prior three months, but it was a five-year low on an annualized basis.
Economic activity, demand and labor data continue to point to a weak economy, the bank said.
The market expects the rate to remain at its current level for some months, and the bank retained its neutral bias in the statement.
"This expectation (for the rate to remain steady) is based on inflation still being far from the tolerance range," Credicorp Capital said in a note to clients, adding that future rate cuts could come if growth continued to undershoot forecasts. (Reporting by Anthony Esposito and Rosalba O'Brien; Editing by Chris Reese and Steve Orlofsky)
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