February 14, 2017 / 9:18 PM / in 5 months

UPDATE 1-Chile central bank keeps rate on hold, points to short-term cut

2 Min Read

(Adds comments, detail from statement)

SANTIAGO, Feb 14 (Reuters) - Chile's central bank held the benchmark interest rate at 3.25 percent at its monthly meeting on Tuesday, but said fresh monetary stimulus was probable in the short term.

Analysts' predictions leading up to the decision were split, with some expecting a rate hold and others expecting a 25-basis-point cut.

The central bank cut the rate 25 basis points last month, the first time in a year that it had moved the dial, as economic growth and investment in the top copper exporter has remained weak, while formerly above-target inflation has cooled rapidly.

"Inflation expectations at the end of the policy horizon are around target, although over the next few months they will be in the lower part of the tolerancy range," the bank said in its post-meeting statement.

It also maintained its bias towards further stimulus.

"The board estimates that in the most probable scenario it will be necessary to increase monetary stimulus in the short term," it said. (Reporting by Santiago bureau; Editing by James Dalgleish)

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