BOGOTA (Reuters) - Colombia’s inflation will slow after upticks in recent months, but not fall toward the 3% target rate before the end of next year, analysts said in a Reuters poll on Wednesday.
Even so, the seven-member central bank board will hold its rate in the short and medium term to avoid hurting economic growth, the analysts surveyed said.
The board has held the benchmark interest rate since April of last year to bolster sluggish growth, which both analysts and the bank are saying will come in below the government’s target.
Inflation expectations in the poll were down slightly for the close of 2019 to 3.63%, from 3.66% in last month’s survey, after consumer prices increased just 0.09% in August, below market expectations.
Inflation predictions for next year among the 14 analysts surveyed held steady at 3.33%.
“Inflation has now reached its peak, but its correction toward the goal in 2020 could be a bit slower given what the majority of analysts expect,” said Fabio Nieto, head of economic investigation at Banco Agrario.
“The expected reductions in food prices and regulated goods will be gradual and the pass-through from the exchange rate to inflation for imported products hasn’t been fully incorporated,” he added.
In September inflation will be 0.16%, taking 12-month consumer price inflation to 3.75%, the same rate as in August, the analysts said.
A large majority of analysts expect the bank board will hold borrowing costs at 4.25% for the rest of the year and then increase them by 25 basis points at some point in 2020.
The board will continue rate holds to avoid any potential negative impact on economic expansion, those surveyed said.
Analysts think growth will reach 3.15% this year and 3.25% in 2020, below government targets of 3.6% and 4% respectively.
Reporting by Nelson Bocanegra; Writing by Julia Symmes Cobb; Editing by Steve Orlofsky