July 18, 2019 / 11:20 PM / 4 months ago

UPDATE 1-Chile central bank holds key rate steady, but says demand for stimulus rising

(Adds details from central bank meeting, byline)

By Fabian Cambero

SANTIAGO, July 18 (Reuters) - Chile’s central bank said on Thursday it would keep the benchmark interest rate steady at 2.5%, in line with market expectations, but noted that pressures were rising that could warrant further cuts.

Chile’s central bank had unexpectedly cut interest rates by 50 basis points in June as the world’s top copper producer grapples with an increasingly sluggish economy that has suffered from global trade tensions.

The central bank said data since the most recent monetary policy report in June underscored how economic risks were rising and “if these trends persisted, the Council believes it will be necessary to expand the current monetary stimulus.”

It said the magnitude of any stimulus would be evaluated during the next monetary policy report in September.

The bank said the decision to maintain the rate was approved by four of the board members; one had voted to cut it to 2.25%.

The South American country is expected to hold its benchmark rate steady until at least September, according to a monthly poll of 59 traders earlier this month, who forecast the bank would then cut the rate to 2.25%.

Reporting by Fabian Cambero; writing by Adam Jourdan; editing by G Crosse and Richard Chang

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