June 16, 2020 / 10:21 PM / 25 days ago

UPDATE 1-Chile central bank maintains interest rate at 0.5%

(Adds further detail on bank plans, background)

By Aislinn Laing

SANTIAGO, June 16 (Reuters) - Chile’s central bank held its benchmark interest rate steady at 0.5% on Tuesday, as expected by the market as the country suffers its most painful weeks so far of the coronavirus outbreak.

The world’s No. 1 copper producer has kept its interest rate steady since successive cuts up until late March, when it warned of a “severe” economic contraction as a result of the virus spread.

The bank said in April it would maintain an expansive monetary policy for a “prolonged period,” to combat the growing impacts of the coronavirus on the country´s economy, while implementing other measures, including the extension of additional credit lines to shield small businesses from the impact of the lockdowns associated with the virus.

Traders and analysts have said they expect the rate to remain at 0.5% for the next 12 months, while inflation in 12 months is seen dropping to 1.90%, below the central bank’s 2%-4% target range. (Reporting by Aislinn Laing Editing by Chris Reese and Jonathan Oatis)

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