| BOGOTA, April 28
BOGOTA, April 28 Colombia's central bank is
likely to cut the key interest rate by a
quarter-percentage-point for a third consecutive month at its
meeting on Friday, with some policymakers perhaps seeking a
bigger cut to bolster economic growth as inflation expectations
The board, which this month will comprise six instead of the
usual seven members, will likely reduce borrowing costs to 6.75
percent, meeting expectations of 17 out of 21 analysts in a
Reuters survey last week. The remaining four polled expect a
half point reduction.
"There are a couple of important things that have happened
in recent days. There has been a sharp drop in market inflation
expectations measured through public debt and the issue of
economic activity" said Camilo Perez, chief economist at Banco
de Bogota, referring to weak industrial and retail data.
"This combination of indicators could require a greater
monetary expansion, although it should not be forgotten that
inflation remains above target," said Perez, who changed his
forecast to a half-point cut from a quarter point last week.
In a split vote in March, four policymakers called for the
25 basis-point reduction, while one wanted a bigger boost to the
economy with a 50 basis-point cut and another voted to hold the
rate at 7.25 percent to assure inflation is "under control."
Board member Adolfo Meisel on April 18 said that a 50 basis
points cut could be "feasible".
Policymakers hope that lowering borrowing costs will help
Latin America's fourth-largest economy pick up speed as
factories trim output and Colombians hold back on purchases of
big ticket items.
And as inflation heads lower - from a high of almost 9
percent in July 2016 - board members have enough space to relax
their position, analysts say.
But despite the decrease, to an annual 4.69 percent in
March, consumer price expectations are still above the long-term
target of 2 percent to 4 percent. Last month's split vote
indicates there is unlikely to be a unanimous decision in the
Only six out of the usual seven policymakers attended the
meeting as new board member Jose Antonio Ocampo will take up his
post in May.
(Reporting by Helen Murphy)