Colombia's central bank holds rate at 13.25% after majority vote
By Nelson Bocanegra and Carlos Vargas
BOGOTA (Reuters) -Colombia's central bank on Friday held the benchmark interest rate at 13.25% for the third time in a row, citing stubborn inflation that, while slowing, remains high and far from the bank's target.
The decision to keep borrowing costs at 13.25% was backed by five of the seven board members. Two of the members backed a cut of 25 basis points.
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 majority of the board considers that, with the information available, it is not prudent to begin a process of reducing interest rates,» bank board chief Leonardo Villar said in a statement, adding that inflation remains persistent and that consumer price growth in August was higher than expected.
While Colombia's 12-month inflation through August slowed to 11.43%, the metric remains almost four times the bank's 3% goal. A Reuters poll on Friday found the median forecast from 16 analysts put 12-month inflation through September at 10.98%.
The analysts also forecast Colombia's inflation would end 2023 and 2024 at 9.30% and 5.10% respectively.
The split decision follows comments last week from board members Roberto Steiner and Finance Minister Ricardo Bonilla, who represents the government on the board.
Bonilla said he would push for a rate cut in the meeting, while Steiner said a cut 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
Read more on investing.com
