UPDATE 2-Chile cenbank didn't weigh Aug rate cut on Astini News
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* All alternatives on monetary policy now possible - bank
* Global woes seen key factor in rate hike pause
* Market sees rate held at 5.25 percent in September (Adds analyst quotes, Reuters poll, byline)
By Alexandra Ulmer and Simon Gardner
SANTIAGO, Sept 2 (Reuters) - Chile's central bank board did not consider cutting its benchmark rate at its last policy meeting, and all future alternatives are equally viable, bank minutes of August's rate-setting meeting showed on Friday.
The bank took another breather in its tightening offensive in August, holding the rate steady at 5.25 percent as the economy slowed, price pressures eased and concerns about global financial turbulence in the United States and Europe mounted. Many in the market expected the bank to hold the rate for now, but see a rate cut by March.
Central Bank President Jose De Gregorio and Finance Minister Felipe Larrain have both signaled a rate cut is now just as likely as a hike.
"The most relevant options for this occasion were to maintain the rate at 5.25 percent, maintaining a tightening bias, or maintain the rate at 5.25 percent, but removing the tightening bias," the bank said in a statement.
Interest rate swaps point to a hold this month, followed by a 25 basis point cut to the key rate in October to end the year at a 5.0 percent rate, according to Matias Madrid, an economist with Banco Penta in Santiago.
The Chilean peso CLP=CL didn't appear to react to the minutes' release, as markets weakened on the back of data showing U.S. employment growth ground to a halt in August.
"The minutes fell within expectations ... so they didn't have much of an effect," said Sergio Tricio, head of research at Forex Chile, a currency brokerage in Santiago.
"For now, I don't think there will be a (rate) cut ... (but) potentially in November or December if the global outlook darkens significantly." <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a TAKE A LOOK on Chile economy [ID:nN26HILEFI] Americas indicators graphic r.reuters.com/nem92s TEXT-Chile cenbank holds rate again [ID:nN1E77H22Q] FACTBOX-Latin American central bank rate moves [ID:nN1E76S1S9] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Global financial woes have prompted a host of regional policymakers to halt rate tightening cycles and even eye a reversal in policy direction.
Brazil's central bank unexpectedly slashed its key interest rate to 12 percent from 12.5 percent on Wednesday, reflecting a mounting global slowdown as well as weaker growth in Latin America's largest economy. For more see [ID:nN1E77U0G8].
Chile's central bank cited global economic deterioration behind its decision to hold rates in August.
"The recommendation to hold the rate was coherent with a scenario in which short-term inflation expectations and risks had considerably lessened and the outlook for the global economy was more negative," the statement read. "All the members of (the Chilean central bank) said the change in global outlook would have effects on the Chilean economy."
Economic activity in Chile is solid, the Chilean central bank said in its minutes on Friday, though many in the market see slower growth in the second half of the year as the direction of the global economy appears grim, interest rates remain high and a strong peso hurts the export sector.
Chile's jobless rate in the May-July period was 7.5 percent, data showed on Wednesday, picking up from the 7.2 percent rate in the April-June period as the economy shows signs of slowing. [ID:nN1E77U0DM]
A Reuters poll conducted on Tuesday showed analysts expect the central bank to hold its key rate interest steady in September while economic growth will likely slow to 4.2 percent in July. [ID:nSAG003013] (Additional reporting by Antonio de la Jara and Moises Avila; Editing by Theodore d'Afflisio)
