UPDATE 2-Chile central bank unexpectedly cuts rate to boost growth
* Rate cut to 4.75 pct from 5.0 pct
* Bank cites gloomier world outlook
* Some in market expect new cut in coming months
(Adds details on global outlook, context, analysts' comments)
SANTIAGO, Oct 17 (Reuters) - Chile's central bank cut its benchmark interest rate by a quarter of a percentage point to 4.75 percent on Thursday in a surprise move to stimulate the Andean country's easing economic growth.
The bank cited a consolidation of "slower world growth, lower terms of trade for Chile, less favorable financial conditions and the maturing of the global cycle of mining investments" as well as expectations that domestic demand, one the economy's key drivers, will wane.
Few in the market had expected the bank on Thursday would break the wait-and-see position it had adopted since a cut to its key rate in January 2012.
"Domestically, economic activity has proceeded at a moderate pace, in line with the scenario in the last Monetary Policy Report," the bank's post-meeting statement said.
"Final demand has reduced its rate of expansion, although not as sharply as was forecast. Various indicators anticipate that it will decelerate further," the bank added.
Some in the market are anticipating an additional rate cut in coming months, likely next year.
But the bank, after cutting the key rate on Thursday, strayed away from openly hinting at further reductions.
"They've removed the downward bias (present in previous statements) from the last paragraph... It suggests they will proceed slowly, perhaps they're letting the market know a movement won't happen next month," said Luis Felipe Alarcon, economist with BCI in Santiago. "It will depend more on what they say in the quarterly monetary policy report (IPoM)."
The central bank sees Chile's economy expanding between 4 and 4.5 percent this year, down from 5.6 percent in 2012.
Analysts polled by the central bank prior to the policy meeting had forecast the rate would be kept steady at 5.0 percent on Thursday and in November, but would be cut by 25 basis points in December.
"We think the central bank's decision is consistent with its inflation mandate, the current levels of the current account deficit and the deterioration of domestic demand," BCP/Credicorp Capital said in a note to clients.
MINING BOOST DIMMING?
Copper prices have shed 9 percent so far this year on fears of easing global demand. A potential big production surplus next year have sparked fears prices could take a further hit.
Over half of world No.1 copper producer Chile's export revenue stems from the red metal, while one job in mining is estimated to create three additional ones in the Andean country.
Though Chile also exports wood pulp, wine, salmon and fruits, its economy remains overwhelmingly copper-dependent and therefore vulnerable to abrupt changes in metals demand from top client China.
Many experts have warned Chile, as well as its export-dependent Latin American peers, to diversify its mining-based economy.
The move to ease monetary policy in Chile compares with regional powerhouse Brazil, where the central bank raised its benchmark Selic interest rate for the fifth straight time last week, keeping the pace of rate hikes steady and giving no signs it was ready to end monetary tightening to battle high inflation.
Farther north in Mexico, the central bank has cut its benchmark interest rate twice this year to a historic low of 3.75 percent in a bid to boost sagging growth in Latin America's No.2 economy.
(Reporting by Alexandra Ulmer, Antonio de la Jara, Fabian Cambero, Felip Iturrieta and Anthony Esposito; Writing by Alexandra Ulmer and Anthony Esposito; Editing by Doina Chiacu, Andrew Hay and Richard Chang)