BOGOTA: Colombia's central bank will raise the benchmark interest rate 50 basis points for the second consecutive month this week, in a bid to control inflation which looks set to stay at above-target range levels during the next year, a Reuters survey showed on Monday.
The seven-member board will raise the key lending rate to 5.75 percent, 12 of 21 analysts said. The nine remaining analysts said the board would raise the rate by 25 basis points. Policymakers raised the rate 75 basis points during September and October, as inflation has reached new highs above the medium to long-term target range of 2 percent to 4 percent.
A further adjustment in the rate would be due to higher-than-expected economic growth, an increase in import and food prices and the high risk that inflation will be above the target next year, said Daniel Escobar, analyst at brokerage Global Securities.
"The markets' expectations for the next 12 months are misaligned," he said.
A majority of those surveyed said the rate would end this year at 5.75 percent and 2016 at 5.50 percent. Inflation expectations for the end of 2015 were up significantly, to 6.30 percent, from 5.75 percent predicted in the October poll. Consumer prices will end 2016 up 4.13 percent, compared with 3.76 percent predicted last month, above the target range.
"The strong effect of the El Nino phenomenon hasn't manifested, there has only been fear of losing the harvest, which has lowered planting and caused demand pressures," said Felipe Pinzon of Profesionales de Bolsa.
"That's why there has been the food price increases which we'll see in the first months of next year."
"Pass-through will keep increasing the 20 percent of tradeable goods, as the peso maintains its downward trend against the dollar next year," Pinzon said. November inflation reached 0.46 percent, well above the 0.13 percent recorded during the same month last year.
The economy will grow 3 percent this year and 2.8 percent next, analysts said.
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