Colombia central bank seen raising rates at Thursday meeting

BOGOTA (Reuters) – The board of Colombias central bank will hold its monetary policy meeting on Thursday, with the majority of analysts expecting one last hike to the benchmark interest rate amid forecasts that the slowing economy will cool inflation.

A Reuters poll last week found that 23 out of 32 analysts expect the board members to hike the rate by 25 basis points to 13%, while the remaining nine forecast a 50 basis-point hike, which would take the rate to 13.25%.

If the majority of analysts are right, the rate will hit levels not seen since November 1999.

However, such a hike would be lower than the most recent rate rise – which took place at the end of January – when the monetary policy authority raised it by 75 basis points to 12.75%.

“We‘re nearing the end of the upward cycle. The economy is slowing down, and although inflation continues to exceed the bank’s (benchmark interest) rate, forecast inflation for the next 12 months suggests the current monetary stance is broadly restrictive,” said Daniel Escobar, director of investment strategy at financial services company Fiduoccidente.

Analysts do not expect the decision will be backed by all seven members of the banks board.

A hike to the interest rate would mirror recent rises from the U.S Federal Reserve and the European Central Bank amid market volatility and tightening financial conditions.

Analysts expect a period of stability lasting several months following a forecast rate rise on Thursday before the central bank begins a downward cycle, bringing the cost of money to 11.5% by the end of this year and reducing it further to 7% by the end of 2024.

(Reporting by Nelson Bocanegra; Writing by Oliver Griffin; Editing by Sandra Maler)