High Jan inflation may mean sharper Colombia rate rises -analysts

lunes 8 de febrero de 2016 12:20 GYT

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.   Continuación...