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BOGOTA, Feb 8 (Reuters) - High January inflation figures may lead policymakers on Colombia's central bank board to increase the benchmark interest rate more sharply than previously anticipated, analysts said on Monday, as the board continues to grapple with a spike in consumer prices and falling growth.
Twelve-month inflation reached 7.45 percent last month, the highest level since 2008, far above the long-term target rate of 2 percent to 4 percent and beyond what analysts had predicted.
Inflation has been above target since March of last year, but January's figure is by far the highest, above the 6.77 percent recorded for December.
Policymakers have raised the benchmark interest rate for the past five months in a effort to counteract drought-induced spikes in food prices and a nearly 40 percent depreciation in the peso currency.
"The bank doesn't have a alternative but to continue to raise the rate and signal to the market that it will keep on track," said Pedro Tuesta, a consultant at 4Cast Inc.
The bank could raise the interest rate to 7 percent, instead of the 6.5 percent predicted in a Reuters survey last month, Nomura Securities' Mario Castro said in a note to investors.
"We believe that the threat to inflation expectations has re-emerged because of this sizable upside surprise," Castro said.
The bank has increased the key lending rate by 150 basis points since September. At its January meeting the board raised borrowing costs to 6 percent, the highest level since March 2009.
Analysts say inflation is likely end the year closer to 5 percent than to 4 percent.
January's inflation figures could tip the balance on the board toward those members who have unsuccessfully supported half-point raises at recent meetings, analysts said. So far, the majority of the seven-member board has backed more-gradual quarter-point increases.
"The effect of this print on inflation expectations should determine if the bank does 25 basis points or 50 basis points in the upcoming monetary policy meeting," Citibank said in a note to investors.
However, worries about economic growth, which the bank predicts will be down to 2.7 percent this year, could dampen enthusiasm for sharper rate rises.
"Even if the bank has to act to anchor inflation expectations, it also can't go overboard, because the issue of economic growth is also in its sights," said Otman Gordillo, director of strategy at AdCap Securities brokerage.
"I think the bank will continue gradual rises because it needs to keep its powder dry for any eventuality." (Reporting by Nelson Bocanegra; Writing by Julia Symmes Cobb; Editing by Dan Grebler)