UPDATE 2-Colombia cenbank ups rate to 4.75 pct, beginning tightening cycle
(Adds analyst comment, details)
By Helen Murphy and Julia Symmes Cobb
BOGOTA, Sept 25 (Reuters) - Colombia's central bank increased its benchmark interest rate a quarter point on Friday for the first time in a year, to stem inflation which picked up as drought and persistent currency devaluation boosted prices even as the economy slows.
In a unanimous decision the seven-member board decided to up the lending rate to 4.75 percent, resuming a tightening cycle and meeting the forecast of 13 of 23 analysts in a Reuters survey.
There are increased risks that inflation is becoming unhinged from the bank's target range of 2 percent to 4 percent and market expectations, the bank said, as a devaluation of the currency and drought from the El Nino weather phenomenon causes price increases.
"The risk of a lasting rise in inflation and an un-anchoring of inflation expectations has risen, while the risk of an excessive slowdown in economic activity has not presented a noticeable change," the statement said.
Twelve-month inflation was above the target range in August, reaching 4.74 percent.
Still, the board said inflation would likely slow to 3 percent. It did not say when.
The bank statement surprised some analysts because in recent days several board members had shown a tendency to keep the rate steady at 4.5 percent. Continuación...