Colombia interest rate seen steady as cenbank weighs GDP, CPI
BOGOTA, July 31 (Reuters) - Colombia's central bank is likely to hold the benchmark lending rate at 4.5 percent for the 11th straight month on Friday as policymakers grapple with the twin constraints of inflation and an economy weakened by the drop in global oil prices.
The meeting of the seven-member board comes as growth expectations for Latin America's fourth-largest economy have been curbed by falling oil revenue, a weakened peso and an increase in inflation. Last month the board voted unanimously to hold borrowing costs.
The decision would meet expectations of all analysts in a Reuters survey earlier this week.
Consumer prices for the 12 months through June rose 4.42 percent, way outside the bank's target range of 2 percent to 4 percent.
The peso has been devalued 54 percent over the last year, a decline analysts say is beginning to affect inflation and therefore the bank's ability to bolster the economy.
"The monetary policy dilemma is very clear, and it's becoming more complex for the bank to decide on the interest rate and other policies such as the exchange rate," said Camilo Perez, chief economist at Banco de Bogota. Perez expects the rate to hold until June.
At 4.5 percent, the interest rate would remain above those in Mexico, Chile and Peru but below Brazil's.
Expectations that rate increases in the United States are imminent as its economy shows signs of renewed pep are likely to be a key consideration for monetary policy in Colombia and other emerging markets in the coming months.
Rate increases in the United States would make its bonds a more attractive investment and could draw money out of Colombia. Continuación...