BOGOTA Dec 16 Colombia's central bank will
likely hold its benchmark interest rate unchanged on Friday for
a fifth month to quell inflation even as the economy grows more
slowly than expected and policymakers look toward cuts next
The bank's seven-member board will keep the rate at 7.75
percent but the vote is likely to be split again, after two
directors voted for a cut last month, analysts said.
The division shows some policymakers are pushing for
Colombia's first rate reduction in nearly four years after the
economy grew 1.2 percent annually in the third quarter, less
than the 1.5 percent expected by the market.
Economic growth has slowed amid a slump in the price of
crude oil, one of Colombia's leading exports. All analysts in a
Reuters poll published this week expect the bank to hold the
"The first thing the bank will look at is the balance of
local risk and it doesn't come out very well. I think that's
going to tip the balance to keep the rate stable," said Camilo
Perez, chief economist at Banco de Bogota.
This is the final board meeting in which Jose Dario Uribe
will vote, as his 12-year tenure as bank chief ends. He will be
replaced in January by Juan Jose Echavarria. Another two
policymakers will be replaced in the first quarter.
After a lengthy period in which the bank has battled
inflation, there are signs that consumer prices are heading
lower toward the 2 to 4 percent target range. Uribe said
recently inflation will come within the range by the end of next
The slowdown in price rises is fueling the idea the bank
could cut rates as soon as January, in what would be the first
reduction since March 2013. Inflation hit nearly 9 percent in
July but will continue to recede now that a prolonged drought
has eased and a truckers strike has ended, the bank has said.
Inflation reached 5.96 percent for the 12 months ending in
November, still well above target.
Some economists question how a tax reform being tackled in
Congress could impact inflation and the bank's future decisions.
(Reporting by Helen Murphy and Nelson Bocanegra; Editing by