June 6, 2017 / 4:01 PM / a year ago

Colombia May inflation could lead cenbank to sharper rate cut -analysts

BOGOTA, June 6 (Reuters) - Colombia’s lower-than-expected May inflation figure opens the door for the central bank board to back a 50-basis-point rate cut at this month’s meeting, analysts said on Tuesday.

The government statistics agency said on Monday consumer prices were up 0.23 percent last month, taking twelve-month inflation to 4.37 percent, closer to the central bank’s long-term target of 2 percent to 4 percent.

The seven-member board has been grappling with the twin pressures of weak economic growth and high inflation. But given the May figure was below the 0.30 percent predicted by analysts, policymakers may now be more comfortable with a sharper rate cut than the 25 basis points trimmed last month.

“It should be highlighted that the inflation results are good news for this central bank board meeting,” brokerage Alianza said in a note to investors. “It has been a key figure in the latest monetary policy decisions.”

The board is still likely to be divided, however, as some members continue to predict that inflation will not fall to within the target range this year, a view shared by some analysts.

“We think that with this figure there’s still room for new cuts in the rate. However, despite these favorable figures, it is still worrisome that some basic inflation measures remain above 5 percent,” Bancolombia said in a note. (Reporting by Nelson Bocanegra; Writing by Julia Symmes Cobb; Editing by Bernard Orr)

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