Chile cbank to act on rates if demand spikes: board member
SANTIAGO, April 15 (Reuters) - Chile's central bank is ready to intensify monetary policy moves to contain inflation if demand picks up more than expected, bank board member Enrique Marshall said in an interview published on Sunday.
Chile's central bank is seen holding its key interest rate steady at 5.0 percent at its next rate-setting meeting on Tuesday, and for the following two months, before hiking it to 5.25 percent within six months, according to the central bank's fortnightly poll of traders published on Wednesday.
As a slowdown in Chile's small, export-dependent economy has been more moderate than expected, markets now see rate hikes later this year rather than cuts they had forecast just a couple of months ago.
"Our vision is that (output) gaps are closed and that the economy will grow in a range of 4-5 percent, which implies growth slightly below trend and which does not require a different monetary policy approach from our base scenario," Marshall told El Mercurio's Sunday edition.
"Of course, if a risk scenario of more dynamic-than-forecast demand materializes, then that would require more intense policy actions with the aim of ensuring the pace of inflation does not accelerate."
Chilean inflation slowed in March and economic activity was firm in February, data showed last week, suggesting the central bank will hold rates steady in coming months as it weighs global economic risks against better-than-expected domestic data.
The central bank cut rates for the first time in 2-1/2 years in January on fears that demand in Europe and top trading partner China would turn sluggish and hit the export-dependent country.
In its latest quarterly monetary policy report issued last week, the bank hiked its 2012 inflation expectations to 3.5 percent from a previous 2.7 percent view and upwardly revised its gross domestic product growth forecast to a range of 4.0 to 5.0 percent this year, up from a previous forecast of a 3.75 to 4.75 percent range. (Writing Simon Gardner; Editing by Eric Beech)
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