By Nelson Bocanegra
BOGOTA (Reuters) – The board of Colombia’s central bank will meet on Friday, where it is expected to hold its benchmark interest rate at 13.25%, despite calls from the government and business groups to begin cuts that would spur economic growth.
All 21 analysts surveyed forecast the bank would hold the rate stable as it has done since June due to stubborn inflation. The board in June ended a tightening cycle during which it hiked the benchmark interest rate by 1,150 basis points.
“The process (of slowing inflation) is being slow and will continue to be. It’s not prudent to start cutting interest rates at the moment,” said Fabio Nieto, chief economist at bank Banco Agrario.
While Colombia’s 12-month inflation through August slowed to 11.43%, the metric remains almost four times the bank’s 3% goal.
Analysts expect the decision to be split between the seven-member board.
Last week Finance Minister Ricardo Bonilla – one of the seven members – said he would push for a cut to the rate, to boost the economy.
However Roberto Steiner, another board member, later said he thought cutting the rate now would be imprudent.
The central bank’s technical team expects Colombia’s economy to grow 0.9% this year, versus an expansion of 7.3% in 2022.
Analysts who do expect rate cuts this year suggest they will be less pronounced than previously forecast. According to the median, the rate is expected to finish this year at 12.5%, about 100 basis points higher than estimated in last month’s survey.
(Reporting by Nelson Bocanegra; Writing by Oliver Griffin; editing by Timothy Gardner)
