(Adds details on quarterly inflation, quotes)
By Nelson Bocanegra
BOGOTA, Aug 12 (Reuters) - Inflation in Colombia will end the year at 3.6%, above the central bank’s long-term target, but eventual monetary policy decisions will help shrink it to 2.8% by the close of 2020, bank chief Juan Jose Echavarria said on Monday.
Pressures on food and other prices will be temporary, Echavarria said during the bank’s quarterly inflation presentation, and the bank board will at some point use policy to help lower consumer prices.
The seven-member bank board has held the benchmark interest rate at 4.25% for fifteen months running, as policymakers have weighed how to stimulate slow growth without stoking inflation, whose long-term target rate is 3%.
Twelve-month inflation was 3.79% through July.
“In summary the news is a little less good than in the past,” Echavarria said at the bank’s quarterly inflation report presentation. “We must return to 3% and the bank will do the work to return to 3%, but there’s no need to do it immediately because that would choke the economy.”
The board “is always balancing how much we want the economy to grow, but that has inflationary effects,” Echavarria said. “If we want more growth we need to lower the interest rate but if there is high inflation we need to raise the interest rate, that’s why there is a difference of opinion on the board.”
Board member Jose Antonio Ocampo said two weeks ago that Colombia was not facing a serious problem with inflation, despite recent upticks in the figure.
Economic growth will have reached 2.8% in the second quarter, compared with the same period last year, Echavarria said. GDP figures for the quarter will be published on Thursday.
Last month, the bank lowered its gross domestic product growth estimate to 3% because of weak external demand and internal consumption similar to last year’s.
The prediction is far from the government estimate of 3.6% and down significantly from the 3.5% previously projected by the bank.
“We need growth above 4.5% in the second half to be able to grow 3% during the whole year and that’s not easy,” he said. (Reporting by Nelson Bocanegra and Carlos Vargas Writing by Julia Symmes Cobb; Editing by Grant McCool)