Colombia's central bank expected to hold rates despite government pressure
April 25 (Reuters) - Colombia's central bank should leave its benchmark interest rate unchanged in its meeting next week, a Reuters poll predicted on Friday, as inflation is expected to remain above target amid global trade uncertainty and weak public finances.
Sixteen of 24 analysts polled by Reuters predicted the monetary authority would hold the rate at 9.5%, while six analysts forecast a 25-basis-point cut to 9.25% and two estimated a 50-basis-point cut to 9.0%.
If the majority are correct, that would mark the central bank's third-consecutive rate hold since it kicked off a rate-cutting cycle in December 2023.
"Greater global risk aversion and lower oil prices are two immediate factors which make the Colombian economy more vulnerable," investment firm Corfi said. "That's been reflected in the depreciation of the peso, the public debt market's volatility and the higher country risk premium."
Meanwhile, some board members are still concerned about fiscal stability and growing inflationary risks, Corfi added.
Annual inflation eased in March to 5.09%, though that was still above the central bank's target of 3%, plus or minus one percentage point.
A rate hold would likely be passed by a narrow majority of the central bank's seven-member board, analysts said. President Gustavo Petro has repeatedly criticized the authority, alleging the rate holds were politically motivated tactics to harm his government.
Central bank head Leonardo Villar dismissed Petro's accusations earlier this month.
"Despite the fiscal risk and the international volatility, Colombia still has access to financing," said Jackeline Pirajan, Scotiabank's chief Colombia analyst.
That "continues to generate pressures on the fiscal side, but leaves the central bank some room to adjust its rate," she added.
Analysts also see fewer cuts to the rate in coming months.
They now on average expect the benchmark rate to end this year at 8.25%, compared to the 7.75% predicted in the previous survey, and to end 2026 at 6.75% compared to a previous forecast of 6.50%.
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