BOGOTA: Colombia's central bank will hold its benchmark interest rate at its meeting this week, analysts in a Reuters survey said on Monday, in a trend set to continue for the remainder of the year as policymakers await a fall in inflation.
All 15 analysts polled said the seven-member bank board will keep the rate at 7.75 percent at its meeting on Friday, which would mean a second consecutive month of rate holds.
Thirteen of those surveyed said policymakers would hold rates steady for the rest of the year, while two analysts predicted cuts beginning in December to help economic recovery after a sharp fall in oil prices dented national income.
"The interest rate will stay stable because of inflation and the expectations that it will begin converging towards the bank's target range," said Juan Felipe Pinzon, analyst at the Profesionales de Bolsa brokerage.
Twelve-month inflation in August was 8.10 percent, more than double the bank's long-term target range of 2 percent to 4 percent.
Despite the high 12-month figure, analysts were surprised by a 0.32 percent fall in consumer prices for last month, due to food prices normalizing after the El Nino drought and a weakening of the peso currency. Analysts' expectations for inflation at the close of the year were down to 6.28 percent from 6.80 percent last month.
In September inflation will fall to 0.15 percent, from 0.72 percent in the same month last year, those polled said. Expectations for the close of 2017 were also down to 4.08 percent, from 4.30 percent in the August survey.
Oil-producing Colombia can expect 2.2 percent economic expansion this year, the analysts said, down from 2.3 percent predicted last month.
In 2017 gross domestic product growth will be 2.75 percent, down from 3 percent predicted in August. The government predicts growth of 2.5 percent this year and 3.5 percent in 2017 because of low prices for crude.
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