By Nelson Bocanegra
BOGOTA (Reuters) – There is no consensus among analysts as to whether Colombia’s central bank board members will cut the key interest rate or hold it in the next monetary policy decision, as they battle to tame inflation and an economic slowdown, a poll showed on Thursday.
Nine of 20 analysts surveyed by Reuters said the bank would keep the benchmark interest rate at 13.25%, its highest point in 24 years.
The other six analysts predicted a 25 basis points cut for the rate and the remaining five forecast it will be trimmed 50 basis points to 12.75%.
Divisions among analysts mirror those of the seven-member central bank board, which decided to hold the rate in the last two meetings in split decisions.
Policy-makers will likely decide to hold the rate at current levels to assess year-end data and minimum wage changes before making cuts, said Andres Pardo, Chief LatAm Macro Strategist at XP Investments.
“Nonetheless, we cannot rule out the possibility of a small 25-bps rate cut at this month’s meeting as economic activity weakness seems to be gathering increased attention by the bank’s board”, he added.
Bets on a rate cut grew after the country’s gross domestic product (GDP) shrank 0.3% in the third quarter and November inflation showed signs of easing.
Annual inflation stood at 10.15% in November, below market estimates but still far from the central bank’s target of 3%.
“It is time to start lowering rates,” Finance Minister Ricardo Bonilla said during an event on Thursday, adding inflation has been stabilizing and is set to end the year in single digits.
According to the survey, the reference interest rate would close at 8% next year and at 5.5% in 2025.
(Reporting by Nelson Bocanegra; Editing by Chizu Nomiyama)
