UPDATE 1-Peru's central bank holds benchmark rate at 4.25 pct

* Rate held at 4.25 pct for 14 months

* Chile held rate at 5 percent on Thursday

LIMA, July 12 (Reuters) - Peru's central bank held its benchmark interest rate steady at 4.25 percent for the 14th straight month as expected on Thursday but said the country's exports are weakening because of slower growth abroad.

All 12 economists surveyed by Reuters had predicted the rate decision as inflation slows and domestic demand supports economic growth in the Andean country.

"This decision is due on the one hand to the deviation of inflation mainly reflecting temporary factors of supply and, secondly, that economic growth is close to its potential," the central bank said in a statement.

"There is still a high level of uncertainty in international financial markets, and reflecting this there have been less favorable terms of trade and perspectives for slower economic growth in developed and emerging economies," the statement said.

Peru registered a trade deficit for the first time in more than three years in April and again in May as the European debt crisis results in lower prices for metals, which account for 60 percent of Peru's exports.

But Central Bank President Julio Velarde said last week he saw no signs that would require monetary stimulus "for now" because domestic demand remains strong in the fast-growing economy.

Chile's central bank also held its key rate steady at 5 percent on Thursday as expected. But Brazil, Latin America's largest economy, cut its benchmark Selic rate to a record-low 8 percent on Wednesday, as the country confronts anemic economic growth.

In response to the European debt crisis and economic turmoil in the developed world, Peru's trade and finance ministries have approved tax breaks and credit guarantees to help exporters. Peru sends 18 percent of its exports to Europe.

But the government says the local economy is strong enough to weather the global crisis and expects growth of 6 percent this year. The central bank forecasts growth of 5.8 percent. Though below 2011's 6.92 percent growth, that would be one of the fastest growth rates in Latin America.

Inflation for the 12 months through June in metropolitan Lima came in at 4 percent, above the central bank's 1 to 3 percent target range. But consumer prices fell 0.04 percent in June, according to official data, a sign inflation is cooling.

The central bank statement reiterated expectations for inflation to end 2012 within its target range and analysts do not expect a rate hike this year.

"The central bank opted to hold rates ... considering the economy to be growing at a sensible rate for the long-term, and with a progressive reversal of supply shocks that pressured inflation earlier in 2012," said Scotiabank analyst Mario Guerrero in Lima.

Peru's sol currency closed bidding 0.27 percent stronger at 2.629 per dollar before the decision.