August 11, 2016 / 10:32 PM / 2 years ago

UPDATE 1-Chile's central bank holds rates, removing tightening bias

(Adds comment, context)

SANTIAGO, Aug 11 (Reuters) - Chile’s central bank held the benchmark interest rate at 3.5 percent on Thursday, as expected, adjusting its bias towards a more neutral stance as inflation has cooled.

The bank had kept the interest rate on hold since January with a bias towards gradual future hikes, as it has balanced the need to stimulate a weak economy with fears of fanning above-target inflation.

But consumer price rises have shown signs of cooling - returning to the top end of the bank’s tolerance range in July - while economic indicators for the top copper exporter have largely remained in the doldrums.

As some economists had predicted it might, the bank removed a reference to “normalizing” monetary policy in its August post-meeting statement, returning to a more neutral stance.

“The board reiterates its commitment to conduct monetary policy with flexibility, so that projected inflation stands at 3 percent over the policy horizon,” it said.

Reporting by Rosalba O'Brien; Editing by Chris Reese, Bernard Orr

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