BOGOTA, Oct 30 (Reuters) - Colombia’s central bank will likely continue to pause its monetary tightening cycle on Thursday as it looks to bolster economic growth amid an uncertain global environment and benign inflation pressures.
The seven-member board will leave the benchmark rate at 4.5 percent, 31 of 32 analysts forecast in a Reuters poll. The board, which began meeting today at 8:30 a.m. in Bogota (13:30 GMT), left the rate steady last month after raising it from 3.25 percent in a series of hikes starting in April. The last move was a quarter-point increase to 4.5 percent in August.
Inflation is forecast by the central bank to end 2014 slightly higher than the mid-point of the 2-4 percent target, a level policy makers are comfortable with even though its above a near 50-year low of 1.94 percent in 2013.
Meanwhile, economic growth is expected to slow to 4.5 percent in the second half from 5.4 percent in the first half.
“This will be an easy meeting because the center of discussion will be focused on the external situation,” said Francisco Chaves, chief economist at Corredores Asociados.
“The global slowdown and the drop in oil prices didn’t have the same weight a month ago, so there’s likely to be more of an aroma of unanimity in holding the rate this time,” he added.
The bank has raised concerns recently about the global economy, highlighting how other nations could impact Colombia. A recovery in the United States comes as China, Europe and other Latin American nations are slowing, and trade terms could deteriorate along with a drop in oil prices, it said.
The U.S. Federal Reserve on Wednesday ended its bond purchase program, a show of confidence its economy is on the mend. While U.S. rates are expected to remain low for some time, improvement in its economy will help bolster Colombian growth.
Last month, one member of Colombia’s board voted to raise the rate a quarter point to damp inflationary pressures that could come if economic expansion quickens in the coming months, the minutes of that meeting showed.
Even so, most analysts in the Reuters survey expect the rate to be held through 2014.
“Those thinking of a rate increase are probably more relaxed now with the current level,” Chaves said.
Board member Carlos Gustavo Cano said on Oct. 8 that the rate could be left at 4.5 percent “hopefully for the longest time possible.”
Policymakers have also expressed concern about Colombia’s revenue stream as crude output and prices decline. Economic expansion slowed to 4.3 percent in the second quarter from 4.5 percent a year earlier. It shrank compared with the first three months of the year.
“With activity growing at what we believe is its potential, and with inflation expectations under control, the central bank should now be able to remain on hold for 2015,” said Munir Jalil, chief economist at Citigroup Colombia, revising his rate estimate for the end of 2015 from 5 percent.
The central bank sees the economy expanding around 5 percent this year, versus 4.7 percent in 2013. (Reporting by Helen Murphy; Editing by Alan Crosby)