BOGOTA, May 22 (Reuters) - Colombia’s central bank will likely hold its benchmark lending rate steady for a ninth straight month on Friday, as policymakers try to boost the economy without stoking inflation.
All 23 analysts surveyed in a Reuters poll this week said the seven-member bank board would keep the rate at 4.5 percent and a majority said that level would be maintained through the end of the year.
There is concern over slowing growth and an uptick in inflation in Latin America’s fourth-largest economy. Government revenue and economic expansion have been dented by the fall in oil prices, Colombia’s biggest export and source of foreign exchange.
“Recent comments by the bank’s board about the economy don’t leave much room to alter its policy of interest rate stability, especially given that the last decision was unanimous,” said Andres Pardo, head of economic research at Corficolombiana.
Analysts polled by Reuters lowered their forecasts for economic expansion to 3.2 percent from 3.4 percent, matching a recent revision by the central bank, which earlier this month lowered its forecast from 3.6 percent.
Policymaker Ana Fernanda Maiguashca has said a 3 percent acceleration in the economy would be a “positive result” and that the current account deficit left little room for rate cuts.
Finance Minister Mauricio Cardenas, who sits on the bank’s board and has remained optimistic about the economy, also trimmed his growth estimate for this year to between 3.5 percent and 4 percent from 4.2 percent because of the oil price decline.
Analysts expect inflation, which has accelerated because of an increase in food prices, to reach as much as 3.85 percent this year, just within the bank’s target range of 2 percent to 4 percent.
Central bank chief Jose Dario Uribe this month outlined a less optimistic scenario for inflation, despite having repeatedly said prices would ease toward 3 percent by year-end. In April, 12-month consumer price growth hit 4.64 percent.
The current account deficit, which the bank forecast will be similar to last year’s 5.2 percent of gross domestic product, is another reason to hold the rate steady, analysts said.
The decision in April to keep the lending rate steady was unanimous, but two analysts polled by Reuters said Friday’s result will be taken by a majority. (Reporting by Julia Symmes Cobb and Nelson Bocanegra; Editing by Helen Murphy and Andre Grenon)