January 19, 2017 / 9:40 PM / 2 years ago

UPDATE 1-Chile's central bank cuts interest rate to spur economic growth

(Adds comments from central bank and analyst, background)

SANTIAGO, Jan 19 (Reuters) - Chile’s central bank cut its benchmark interest rate by 25 basis points to 3.25 percent on Thursday, the first reduction in over two years, as it seeks to jump-start weak economic growth.

The market had widely anticipated the rate cut, as inflationary pressures have dissipated and economic growth in the copper exporter has fallen short of expectations.

In its post-meeting statement, the bank said there was room for a further loosening of policy if necessary.

“As was said in the last Monetary Policy Report, the board estimates that, if the recent trends of the economic scenario persist, and so do their implications on the medium-term inflation outlook, it will be necessary to boost the monetary impulse,” the bank said.

The decision was “justified considering flat economic growth and as consumer prices subside at a faster clip than projected,” Banco Santander said in a note to clients.

“We expect at least another additional rate cut shortly,” Santander added. (Reporting by Anthony Esposito; Editing by Meredith Mazzilli)

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