BOGOTA: Colombia's central bank may cut its key interest rate on Monday for a third straight month as the government piles pressure on policymakers to protect the economy from a global slowdown that has hurt growth.
The board could reduce its overnight lending rate by a quarter point to 4 percent after weakness in the industrial and export sectors sparked concern the economy is stalling.
Strong capital inflows have boosted the value of the currency against the dollar and hurt manufacturers and exporters.
A Reuters poll last week found all but one of 34 economists expect the bank to cut the rate. One economist forecast the bank would hold it steady.
Most of those polled reckon the bank will take additional measures to curb the peso's gains. A lower rate would attract fewer dollars into the market.
"The year has started with little force and so the bank's objective is to anchor the nation's economic growth," said Diana Guiza, an economist at brokerage Corredores Asociados in Bogota.
"With risks to economic growth, it's appropriate to provide more dynamism."
Last month, the board cut the rate 25 basis points to 4.25 percent after the government revealed slower-than-expected annual growth in the third quarter that was the weakest in three years.
The data was released a day before the board last met, causing a split in the vote. Some members called for a half-point cut and one argued that 4.25 percent was already historically low and more reductions would move the rate further away from a neutral level.
The bank's board will begin its policy meeting at 8:30 am.
Central bank chief Jose Dario Uribe has repeatedly said the bank's main responsibility is to keep inflation under control and prevent bank lending from encouraging too much household debt.
Inflation last year reached 2.44 percent, comfortably within the bank's target range of 2 percent to 4 percent and low enough to allow the bank to cut the benchmark lending rate again.
"A good part of monetary policy decisions are based on how inflation looks for this year and the minutes of the last meeting are clear that it's below what the bank was expecting," said Andres Langebaek, an economist at financial entity Grupo Bolivar in Bogota.
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