BOGOTA Dec 29 Members of Colombia's central
bank board who were against a 25 basis point rate cut at the
bank's December meeting cited concerns about the risks of
inflation, minutes released on Thursday showed.
In a split decision, four members of the seven-person board
voted to reduce the lending rate to 7.5 percent at the meeting -
the first reduction in almost four years - as inflation shows
signs of heading down toward the bank's target range of 2 to 4
Economic growth has slowed amid a slump in the price of
crude oil, one of Colombia's leading exports. Inflation hit
nearly 9 percent in July, but has receded now that a prolonged
drought has eased and a truckers strike has ended.
According to the minutes, board members who were against the
cut argued that though inflation is beginning to drop toward the
target, there still are not sufficient indications that it will
fall to within the target range by 2017.
"The most significant risks are those derived from diverse
indexation mechanisms of prices and salaries and of the possible
effects of changes in monetary policy in the United States and
Europe," the minutes said.
Latin America's fourth-largest economy will likely end the
year with 5.6 percent inflation, which would mark a second year
in a row the figure has been above the target range.
Some board members emphasized that inflation expectations
were up slightly over the last month.
"In this environment, a reduction in interest rates may
carry the risk of reinforcing the change in expectations for
inflation, which could generate instability in monetary policy
and costs," the minutes added.
(Reporting by Nelson Bocanegra and Julia Symmes Cobb; Editing
by Leslie Adler)