Colombia cenbank may hold interest rates steady for the first time in year

miércoles 31 de agosto de 2016 09:30 GYT

By Nelson Bocanegra and Helen Murphy

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.   Continuación...