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By Julia Symmes Cobb
BOGOTA, Aug 21 (Reuters) - Colombia's central bank held its benchmark interest rate for a 12th consecutive month on Friday, as policymakers grapple with the twin constraints of faster inflation and an economy weakened by the plunge in global oil prices.
The seven-member board decided to maintain the lending rate at 4.5 percent, meeting the forecast of 20 out of 22 analysts in a Reuters survey last week.
Some members favored raising the rate, board co-director Jose Dario Uribe said, though the majority voted to leave the rate unchanged.
"Inflation remains above the upper limit of the target range and domestic spending in the economy continues to adjust to the lower dynamic of national income," the board said in a statement.
The decision comes as expansion predictions for Latin America's fourth-largest economy have been curbed by falling oil revenue and a weakened peso that is stoking inflation.
The currency reached another record low on Friday, closing at 3,101 pesos to the dollar. Analysts said the effect of continued depreciation on inflation may hasten the arrival of rate hikes.
Low prices for crude, Colombia's biggest export and source of foreign exchange, explained the sharp drop in the currency, the statement said, adding that if commodity prices continue at current levels, national income will be lower than expected.
The devaluation coupled with the El Nino weather phenomena, which could increase food prices, may keep inflation above the bank's target range of 2 percent to 4 percent, the statement said.
"The impact of the devaluation of the peso in consumer prices and the persistence of El Nino may slow the convergence of inflation to the target rate."
The bank has revised down its estimate for economic growth this year to 2.8 percent from 3.2 percent and has said the depreciating currency would mean inflation ends the year at between 4 percent and 5 percent.
"There's certainly no sign here that policymakers have been spooked by the drop in the peso and are preparing to step in to support it," Capital Economics said in a note to investors.
"That being said, were the peso to suffer a further sharp fall over the coming weeks and months, it wouldn't surprise us to see the central bank respond by raising interest rates," the note added.
At 4.5 percent, the interest rate remains above that of Mexico, Chile and Peru but below that of Brazil. (Reporting by Julia Symmes Cobb; Editing by Bernard Orr and Matthew Lewis)