UPDATE 1-Chile central bank holds benchmark rate at 5 percent
* Strong domestic activity offsets global threats * Chile's economy easing more slowly than forecast * Several Latin American central banks holding rates * Inflation expectations aligned with target-cenbank SANTIAGO, Nov 13 (Reuters) - Chile's central bank kept its benchmark interest rate on hold at 5.0 percent, as expected, on Tuesday for the 10th consecutive month as robust local growth offset looming risks from a slowdown in global demand. Rates have stayed on hold since a cut in January largely because the world's No. 1 copper producer has shown better-than-expected resilience to slowing demand from top trade partner China and fallout from the euro zone's crisis. "Domestically, output and demand indicators have evolved above projections. The labor market remains tight," the central bank said in its post meeting statement. Chile's export-dependent economy this year may post growth of slightly more than the official forecast of 5 percent, Finance Minister Felipe Larrain told Reuters last week, but he kept to a growth outlook for 2013 of 4.8 percent, noting that Chile faces slowing exports to Europe. October's high CPI (Consumer Price Index) number was due to one-time factors, the central bank said, adding, "Year-on-year inflation is around 3 percent, while core inflation measures remain below 3 percent. Inflation expectations over the policy horizon are aligned with the target." Chile's consumer prices rose by double what the market expected in October, chiefly due to the cost of food, non-alcoholic beverages, housing and electricity, the government reported last week. Inflation in the 12 months to October was 2.9 percent, just below the 3.0 percent midpoint of the central bank's policy horizon target. The benchmark interest rate is seen at 5.0 percent in five and 11 months, the bank's latest poll of analysts showed on Monday. "Altogether, domestic and external risks to activity and inflation continue to broadly offset each other and this condition underpins our call for no monetary policy action for the foreseeable future," Goldman Sachs economist Alberto Ramos said in a note to clients. "The domestic economy continues to expand at a remarkably solid pace, despite the challenging global backdrop, with demand failing to decelerate to the originally envisaged more moderate pace during (the second half of the year)," Ramos added. The central bank made no mention of Chile's peso currency in its statement, but said the U.S. dollar has appreciated in international markets. Last week the bank started a temporary program to boost the liquidity of the country's peso in financial markets to "mitigate possible tensions towards year-end". The peso, which has gained around 6.9 percent versus the dollar this year, ranks behind the Hungarian forint as the strongest foreign currency performer against the U.S. dollar among 152 currencies tracked by Reuters. LATAM CENTRAL BANKS HELD RATES Chile's central bank isn't the only monetary authority holding its fire in the region. Brazil's central bank will likely keep interest rates at their current record low of 7.25 percent until at least the end of next year to help support a sluggish economic recovery, a weekly central bank survey of economists showed on Monday. Colombia's central bank kept its benchmark interest rate steady for a second-month running at 4.75 percent at its latest meeting on Oct. 26, given a mixed picture for domestic growth and the global economy. Peru's central bank held its benchmark interest rate steady at 4.25 percent for the 18th month in a row last week, as inflation has retreated and the economy grows near its potential.
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