UPDATE 1-Chile cenbank poll sees benchmark rate held in May

* Benchmark rate seen at 1.75 pct by October

* Economy seen growing despite quake’s impact

* April IMACEC seen up 0.1 percent
(Updates with background, details)

SANTIAGO, May 11 (BestGrowthStock) – Chile’s central bank is seen
holding its benchmark interest rate at a low of 0.5 percent on
Thursday, but the rate is likely to climb to 1.75 percent by
October, a central bank poll of analysts showed on Tuesday.

The poll also shows analysts expect the benchmark rate to
rise to 2.5 percent by December. A separate Reuters survey of
analysts this week found the market expects the central bank to
begin gradually raising its benchmark rate in June or July. For
more, see [ID:nN10230026]

Chile’s central bank considered raising its key rate by 25
basis points in April, but held off because uncertainty
remained over the impact of a massive Feb. 27 earthquake on
activity and inflation, minutes showed last month.

The bank has held its benchmark rate at a historic low of
0.5 percent since mid-2009, first to help the economy recover
from global financial crisis, and then from the ravages of the
quake. For more, see [ID:nN30167267]

The central bank poll also showed analysts estimating the
economy will expand by 3 percent in the second quarter from a
year earlier. However, they maintained their earlier forecast
for full-year gross domestic product growth of 4.5 percent.

Analysts expect economic activity (IMACEC) to expand by 0.1
percent in April from the same month a year earlier, the poll
showed.

The economy contracted 2.8 percent in March because of the
quake, which killed hundreds of people, destroyed towns and hit
the fruit, steel and forestry industries in south-central
Chile, though the mainstay copper mining industry was mostly
unscathed.

Industrial output plunged 17.4 percent in March from a year
earlier, the biggest drop in at least 20 years, because of the
quake, but it is seen bouncing back later in the year. For
more, see [ID:nN28181261] [ID:nN0560789]

The quake led the central bank to cut its 2010 gross
domestic product growth forecast range to 4.25 percent to 5.25
percent from a previous outlook for a 4.5 percent to 5.5
percent expansion.

The central bank poll showed analysts expect consumer
prices to rise by 0.4 percent in May after a slightly
smaller-than-expected 0.5 percent in April, with inflation
coming in at 3.5 percent for 2010.
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(Reporting by Alonso Soto and Antonio de la Jara. Writing by
Simon Gardner; Editing by Theodore d’Afflisio)

UPDATE 1-Chile cenbank poll sees benchmark rate held in May