BOGOTA, Aug 31 (Reuters) - Colombia’s central bank board is set to reduce borrowing costs for the final time on Monday after months of cuts meant to help an economy battered by the coronavirus.
In a Reuters survey last week 16 of 17 analysts polled said the seven-member board will lower the interest rate to a historic low of 2%, where it will stay for the remainder of 2020.
The cut would be the sixth in a row and mark 225 basis points in reductions since March.
“We believe there will be intense discussion among the board about whether to lower the rate or not. If it is lowered by 25 basis points we think it’s very improbable it will be lowered more,” said Munir Jalil, head economist for the Andean region for BTG Pactual.
“What we’re asking ourselves now is how long that rate will last - in our case we think the rate will be at the level that we’ll reach now during all of 2021,” Jalil said.
The bank has sought to soften the effects of more than five months of coronavirus quarantine with the rate cuts, as businesses have shuttered and urban joblessness has soared to just under 25%.
Inflation is set to end the year between 1% and 2%, well below the long-term target of 3%, because of reductions in consumption.
The government estimates the economy will contract by 5.5% this year, while the central bank predicts a less optimistic contraction of between 6% and 10%, before a recovery takes hold in 2021. (Reporting by Nelson Bocanegra Writing by Julia Symmes Cobb; Editing by Steve Orlofsky)
Our Standards: The Thomson Reuters Trust Principles.