(Adds context for rate increase from central bank)
Oct 18 (Reuters) - Chilean central bank policymakers made a surprise decision to increase the benchmark interest rate by a quarter percentage point on Thursday, with an eye on ensuring inflation remains close to target levels amid an uptick in domestic activity.
Central bank policymakers unanimously decided to raise the benchmark interest rate by 25 basis points to 2.75 percent, ending a long cycle of expansive monetary policy, and contrary to market expectations.
A traders’ poll conducted by the bank on Oct. 12 suggested the rate would hold steady at 2.50 percent for the month.
“The Council considers that monetary stimulus should begin to be reduced to ensure that inflation prospects remain close to the target,” the central bank said in a statement. (Reporting by Santiago newsroom, writing by Cassandra Garrison Editing by James Dalgleish)