Colombian cenbank may hold rate amid oil worries, impact on growth

viernes 28 de noviembre de 2014 09:30 GYT

By Julia Symmes Cobb

BOGOTA Nov 28 (Reuters) - Colombia's central bank will likely hold the key interest rate for a third straight month on Friday, as on-target inflation allows policymakers to delay further increases amid worry over a drop in global oil prices and the impact on the economy.

The seven-member board will leave the lending rate at 4.5 percent, according to 15 of 16 analysts polled by Reuters. In October it voted unanimously to hold borrowing costs.

The bank raised the interest rate 125 basis points between April and August after faster-than-expected first quarter growth raised questions about inflationary pressure. Economists had expected the rate to end the year at 5 percent.

Although the bank forecasts economic growth of up to 5 percent this year - among the highest in the world - it says it is worried about global oil prices and the negative effect slowing growth in other countries could have on Colombia.

The United States' recovery comes as China, Europe and other Latin American nations are easing, and trade terms could deteriorate along with a drop in oil prices, policymakers said.

"To the extent there's this hit on oil that somehow ends up impacting the economy, it will be difficult for the bank to consider additional raises and considering decreases is not an immediate scenario," said Munir Jalil, chief economist at Citibank for Colombia, Venezuela and Ecuador.

"We expect the central bank to pause, not only for what remains of the year, but for all of 2015."

Global prices for crude, Colombia's biggest export and source of foreign exchange in the $380 billion economy, have fallen more than a third since June, creating fiscal worries as royalties and tax earnings decline.   Continuación...