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By Julia Symmes Cobb
BOGOTA, Sept 30 Colombia's central bank kept its
benchmark interest rate unchanged on Friday, as expected by
analysts, as policymakers attempt to quell stubbornly high
inflation even as economic growth slows.
The seven-member board decided unanimously to maintain the
lending rate at 7.75 percent, as predicted by analysts in a
Inflation, which has begun to fall after reaching nearly 9
percent in July, will continue to decrease now that a prolonged
drought, a truckers strike and currency depreciation which lead
to spikes in consumer prices have eased, the board said in a
"The effects of temporary supply shocks that have affected
inflation and inflation expectations have begun to reverse and
the board expects this trend to continue. This, together with
monetary policy actions taken so far, should lead inflation to
the target range in 2017," the statement said.
The bank's long-term target range for inflation is between 2
and 4 percent.
Finance Minister Mauricio Cardenas, who represents the
government on the board, said it would not be the time to
consider rate cuts until it was more certain inflation would be
within the target range next year.
"Even if we are optimistic about the future behavior of
inflation...we need to have more clarity that it will be below 4
percent at the end of next year," Cardenas said.
Food prices should continue to fall until at least the first
quarter of next year, the board added.
The current account deficit for 2016 could be lower than
what was projected last month and data continues to suggest a
downward trend for economic expansion for this year to the 2.3
percent predicted by the bank's technical team.
The government said the economy will expand by 2.5 percent
A Reuters survey of 15 analysts earlier this week
unanimously predicted the board would hold the rate, and a
majority said the rate will be held steady until the end of the
Twelve-month inflation was 8.10 percent in August, slightly
below July, when it was 8.97 percent.
President Juan Manuel Santos said this week policymakers
could begin to consider decreasing the rate to avoid high
borrowing costs affecting the economy.
(Reporting by Julia Symmes Cobb, additional reporting by Nelson
Bocanegra, Carlos Vargas and Monica Garcia; Editing by Diane
Craft and Lisa Shumaker)