* Colombia interest rate lowest in Latin America
* Central bank continues to intervene in currency market
* Inflation remains below target range
By Peter Murphy and Helen Murphy
BOGOTA, Feb 28 (Reuters) - Colombia's central bank is likely to leave the benchmark lending rate unchanged for an eleventh straight month on Friday, as looser monetary policy continues to stimulate the economy without pressuring still-low inflation.
The seven-member policy board will hold borrowing costs at 3.25 percent, a Reuters survey of 30 analysts found - a level that policymakers say has helped stimulate consumer spending and investment.
The bank shaved 200 basis points off the interest rate from July 2012 until March 2013 to help boost economic growth, and has held it steady since. The next rate lift could come as soon as May, analysts say, as inflation begins to creeps higher.
"The bank won't lift the rate until there is certainty that economic growth is sustainable; they will wait for that confirmation," said Carlos Castaneda, analyst at brokerage Asesores en Valores in Bogota.
Colombia's economy grew a better-than-expected 5.1 percent in the third quarter from the year-ago period, but the government revised down its second quarter number. Spare productive capacity, or a so-called negative output gap, is seen as one of the reasons for the economy's low inflation.
The government has forecast growth of 4.3 to 4.5 percent for 2013 and 4.7 percent for 2014. Economic data for the fourth quarter and full-year 2013 are expected only at the end of March.
The board will also be looking for signs that inflation is beginning to pick up. Consumer prices ended last year up 1.94 percent, the smallest increase in five decades, giving policymakers leeway to keep interest rates at levels that fuel growth.
At 3.25 percent, Colombia's interest rate is the lowest in Latin America. Regional rates span from 3.5 percent in Mexico to 10.5 percent in Brazil.
"The inflation issue remains important as far as the bank's decision making is concerned and the fact that there is little inflationary pressure will provide the room to extend further the bank's rate pause," said Carlos Cardoon, economic strategist at Corredores Asociados.
Colombia's steady monetary policy sets it apart from other central banks in emerging markets, which in the last few months have been raising rates to contain an exodus of investors as fears about the health of many economies sparked a selloff.
Currencies also tanked across emerging markets in anticipation of further withdrawal of U.S. monetary stimulus and signs that China's economy, the world's second largest, has cooled down.
Colombia's peso has weakened about 6.5 percent versus the U.S. dollar this year, and 12.9 percent over the last 12 months.
Even so, the bank, led by Jose Dario Uribe, has persisted with its intervention in the foreign exchange market, buying dollars to build up its foreign reserves and defenses against external shocks.
The bank has been intervening in the exchange market for more than two years to stem gains in the peso, and at the December board meeting extended its program to as much as $1 billion through the end of March. (Additional reporting by Nelson Bocanegra; Editing by Richard Chang)