BOGOTA: Colombia's central bank will likely hold the benchmark interest rate unchanged on Friday for a fourth month as policymakers attempt to quell stubbornly high inflation even as economic growth slows.
The seven-member board may begin discussing the timing of its first rate cut since March 2013 but will probably keep the rate at 7.75 percent to ease inflationary pressure.
The bank will also take a close look at data for third-quarter economic growth, due out at 1100 EST, and analyze how it will impact future rate decisions.
Policymakers have sought to ease inflation even as economic growth slows amid a slump in crude oil prices.
The bank last month cut its economic growth estimate for the year to 2 percent from 2.3 percent.
Consumer price rises have begun to slow after reaching nearly 9 percent in July. Inflation will probably continue to recede now that a prolonged drought, truckers' strike and currency depreciation, which lead to spikes in consumer prices, have eased, the bank has said.
"Even while inflation eases, the central bank will hold the rate because of risks of devaluations (in the currency) over the medium term," said Juan David Ballen, economist at Casa de Bolsa.
"Also we haven't measured the impact an increase in VAT may have on inflation expectations," he said, referring to the tax reform in Congress that seeks to bolster VAT to 19 percent from 16 percent. In a Reuters poll published on Monday, all 13 analysts expected the interest rate to be held this month.
Inflation reached 6.48 percent for the 12 months ending in October, down from a high of 8.91 percent in July, but still well above the bank's long-term target range of between 2 percent and 4 percent.
Food prices, which make up about 30 percent of the inflation index, should continue to fall until at least the first quarter of next year, though some policymakers say it's unlikely inflation will drop to the target price in 2017.
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