BOGOTA, Aug 31 (Reuters) - Colombia's central bank is expected to hold its benchmark lending rate for the first time in a year on Friday to help a sluggish economy, even though inflation remains well above the target.
The seven-member board will probably maintain the lending rate at 7.75 percent after raising it 325 basis points over 11 consecutive months. The vote would meet expectations of 15 out of 21 analysts in a Reuters poll published last week.
The board's decision has been split recently, with some policymakers believing the rate should have been held at 7.5 percent in July to allow breathing space for the economy, saying increases in consumer prices are temporary.
The government revealed on Monday that second-quarter gross domestic product grew a slower-than-expected 2 percent annually - a seven-year-low - and prompted Finance Minister Mauricio Cardenas to revise his 2016 growth estimate downward to 2.5 percent from 3 percent. The central bank expects annual growth of 2.3 percent.
Cardenas, who represents the government on the central bank's board, called again for the rate to be held this month.
"My position on interest rates is well known; the growth figures yesterday reaffirmed the view that we have expressed in recent months," he said Tuesday.
"There is a slowdown."
A hold vote would bring an end to the bank's yearlong tightening cycle, which has tried to ease stubborn inflation, which at 8.97 percent in July was more than double the bank's target range of 2 percent to 4 percent.
"We believe the data to take into account in Colombia's economy today is not inflation; it's the growth figures," said Otman Gordillo, chief economist at brokerage AdCap Securities in Bogota. "It was striking, the weakness seen in most of the leading numbers."
Mining, which includes petroleum production, fell 7.1 percent during the quarter.
"This necessarily should make the central bank move downward quickly, maybe before the end of 2016," said Gordillo.
Other analysts reckon the bank should take one final shot at inflation before changing course.
Inflation has been pressured by the El Nino drought, a 45-day trucker strike which ended last month, and the weakened peso currency, which have all raised food and energy prices, sending inflationary outlooks higher.
"We hope the bank raises another 25 basis points, taking the rate to 8 percent given that in July inflation was so high that it was beyond all estimates by the central bank's technical team," said Juan David Ballen, economist at brokerage Casa de Bolsa. (Reporting by Helen Murphy; Editing by Jonathan Oatis)