January 31, 2019 / 6:52 PM / 6 months ago

UPDATE 1-Colombia central bank holds key lending rate at 4.25 pct, as expected

(Adds comment, detail on reserves)

BOGOTA, Jan 31 (Reuters) - Colombia’s central bank held its benchmark interest rate steady for a ninth consecutive month at its meeting on Thursday, as it seeks to boost economic growth while inflation remains largely controlled.

The unanimous decision met expectations of all analysts in a Reuters poll last week.

Economic growth in the Andean nation will continue to pick up as a new tax reform, backed by President Ivan Duque, brings in additional revenue and household spending increases, the seven-member board said in a statement explaining its decision.

Policymakers expect growth close to 3.5 percent in 2019, the statement said, even while expectations for the price of crude remain low.

“The international price of oil has increased this month, but remained below the average observed in 2018. In the same period the country risk premium was reduced and the peso appreciated against the dollar,” the statement said.

The board said its decision to hold the rate was also based on the dynamics of economic activity and uncertainty about the speed of that recovery. It looked at inflation and that figure’s expected convergence to the bank’s 3 percent target, as well as the effects of changing external conditions.

The central bank also said it would buy $1 billion from the government as it seeks to accumulate international reserves.

The bank has gathered some $800 million via auctions of its “PUT” options, in preparation for a possible reduction of its $11.5 billion credit line with the International Monetary Fund next year.

Another $400 million in “PUT” options will be auctioned in February, the bank said.

For 2019, the current account deficit is projected to be a higher proportion of GDP than that registered in 2018, it added. (Reporting by Julia Symmes Cobb and Helen Murphy; editing by Diane Craft)

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