September 23, 2019 / 6:22 PM / a month ago

Colombia's central bank holds interest rate, raises growth estimate

BOGOTA (Reuters) - Colombia’s central bank board unanimously held its benchmark interest rate steady at 4.25% at its meeting on Monday and raised its economic growth prediction for the year, taking it closer to the government’s target.

FILE PHOTO: Colombia's Finance Minister Alberto Carrasquilla Barrera speaks during the Fourth Colombian Business Congress in Medellin, Colombia August 15, 2019. REUTERS/David Estrada/File Photo

The decision to hold the rate yet again met the predictions of all analysts in a Reuters survey last week. The analysts expect the board to hold the rate until next year.

The six policymakers present raised 2019 expansion expectations to 3.2% from 3%, moving their figure nearer to the government target of 3.6%.

“The economy is rebounding, it is rebounding better than what people think,” said Finance Minister Alberto Carrasquilla, who represents the government on the board.

Analysts predict growth will reach 3.15% this year.

The board looks likely to meet analysts’ expectation of rate holds through the end of 2019.

“My best prediction with the current information is that what could happen is for the rate we have today to be held a few months more,” board chief Juan Jose Echavarria said.

The decision to keep borrowing costs steady was based on inflation falling toward the bank’s long-term 3% goal, the board said in a statement.

“Basic inflation measures continue around 3%. It is expected that at the end of 2019 these supply shocks will begin to dilute, and inflation will resume its convergence to the target, as reflected in market expectations,” it said.

Inflation expectations in the poll were down slightly for the close of 2019 to 3.63%, from 3.66% in last month’s survey, as food prices moderated.

Monday’s meeting included only six of the board’s normal seven members because new member Roberto Steiner has not yet taken up his post.

Reporting by Carlos Vargas and Nelson Bocanegra; Writing by Julia Symmes Cobb; Editing by Will Dunham

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