UPDATE 1-Inflation in Chile still off central bank's target, says Costa

(Adds quote from cenbank president, inflation data) SANTIAGO, March 6 (Reuters) - Rising consumer prices in Chile have not yet reached the target set by the country's monetary policy authority, the central bank chief said on Monday, pointing to surprises that have pushed inflation up while cooling expectations of interest rate cuts. Getting inflation back to the bank's 3% target "is not simple," said Rosanna Costa, the central bank president, at a private event. Costa noted the bank has kept its benchmark interest rate steady in recent months, arguing it will likely remain unchanged until creeping consumer prices start to approach the target. "We will make decisions that are coherent with the macro scenario," she said. Chile's annual inflation rate accelerated in January to 12.3%. The South American country's central bank is expected to maintain the key lending rate at 11.25% at its next monetary policy meeting in April, according to a poll of analysts. Both the bank's forecast as well as private sector projections expect annual inflation to return to single-digit territory during the second quarter, Costa noted. The central bank's chief explained that much of the pressure on prices comes from the excessive growth in domestic spending due to what she described as the "bulk liquidity provided by pension withdrawals and universal fiscal transfers" in response to the impact of the COVID-19 pandemic on household budgets. Chile's monetary authority has carried out an accelerated withdrawal of the monetary stimulus it applied during the pandemic as economic activity recovered, a policy decision that also generated strong inflationary pressures. (Reporting by Fabian Cambero; Writing by Valentine Hilaire; Editing by Anthony Esposito and Sharon Singleton)

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