(Adds rate decision, comment, context)
BOGOTA, March 24 Colombia's central bank cut its
key interest rate a quarter point for a second consecutive month
at its meeting on Friday, as policymakers decided a boost to
consumer confidence and the sluggish economy is needed even with
The board, which comprised six instead of the usual seven
members, reduced borrowing costs to 7 percent, meeting
expectations of 13 out of 14 analysts in a Reuters survey last
In a split vote, four policymakers called for the 25
basis-point reduction, while one wanted a bigger push to the
economy with a 50 basis-point cut. One board member voted to
hold the rate at 7.25 percent to assure inflation is "under
It was the third rate cut since the bank started a trimming
cycle in December.
Most of the policymakers hope that lowering borrowing costs
will help the economy pick up speed amid weak production and
consumption figures in Latin America's fourth-largest economy.
"Recent indicators of economic activity such as retail
sales, industrial production and consumer confidence suggest a
weakening of the economy in the first quarter of the year," the
"The effects of the strong supply shocks that diverted
inflation from the target continue to be diluted. This is
indicated, for example, by the deceleration of food prices in
Board members have enough space to relax their position,
analysts said, given the significant easing of inflation.
Despite the decrease, consumer price expectations are still
above the long-term target of 2 percent to 4 percent, and
Friday's split vote indicates there is unlikely to be a
unanimous decision in the near future.
"I personally consider that the interest rate should fall
faster because the economy needs that stimulus for consumption,
for investment," said Finance Minister Mauricio Cardenas, who
represents the government on the board.
Consumer prices rose 1.01 percent in February, taking
cumulative 12-month price growth to 5.18 percent.
"The recent pulse of the economy shows a dangerous cooling
that requires support from the central bank to recover," said
Wilson Tovar, head economist of the Acciones y Valores
brokerage. "It's necessary to up the pace."
Last week, the International Monetary Fund revised down its
growth projection for the Andean country to 2.3 percent from 2.6
percent, and below the government's 2.5 percent target.
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; Editing by Julia Symmes Cobb and