UPDATE 2-Colombia central bank sees growth pick-up, faster 2014 inflation
By Peter Murphy and Nelson Bocanegra
BOGOTA Feb 14 (Reuters) - Colombia's inflation is likely to rise to between 2.5 and 3.0 percent in 2014, central bank director Jose Dario Uribe said on Friday, with faster economic growth helping lift the indicator from its lowest level since 1955 in 2013.
Inflation fell below the bank's two to four percent target range to 1.94 percent last year despite a comparatively low benchmark interest rate held at 3.25 percent for 10 straight months which stoked economic activity but price increases to a lesser degree.
Uribe said the drop in the peso by 14 percent in the last year versus the dollar would provide a "low" amount of inflationary pressure due to more costly imports, while quickening economic activity would compound price increases further.
"All these factors lead in the direction of inflation approaching three percent over the course of the year, but very probably we will end up below three percent by December," Uribe said, presenting the bank's quarterly inflation report.
The minutes of the rate-setting meeting, held by the bank's seven-member board of directors on Jan. 31 and published on Friday, said members saw inflation on track to reach the 3 percent center of their target range and that the economy would reach its potential growth level over the course of 2014.
The minutes said differences among members persisted over how quickly these changes will take place. Perceptions of how quickly the economy is nearing those points are likely to be key considerations in the board's subsequent rate-setting meetings.
Bumper harvests that held down food prices last year are not expected to be as large in 2014, likely causing faster inflation in that segment which has a roughly one-third weighting in the consumer price inflation index. Continuación...