UPDATE 1-Colombia central bank seen holding rate amid divided board

Wed Nov 21, 2012 5:35pm EST

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(Adds comments from finance minister)
    By Nelson Bocanegra
    BOGOTA, Nov 21 (Reuters) - Colombia's central bank will hold
its benchmark interest rate steady on Friday as worries about
the global economy begin to recede and policymakers see a
manageable slowdown in the local economy, according to a Reuters
survey of analysts.
    In a poll conducted on Wednesday, 26 out of 29 analysts said
the bank's seven-member board will vote to hold the rate at 4.75
percent for a third straight month, though the decision will be
split. The other three analysts see a rate cut to 4.5 percent.
    Finance minister Mauricio Cardenas, who also presides over
the central bank board of directors, told reporters he believes
borrowing costs should be lowered to spur industrial growth.
    "The industrial sector continues to be stagnant, therefore
we need more measures to support the industrial sector and
obviously a reduction in interest rates will be very important
to reach that goal," Cardenas said.
    But before Cardenas made the comments, the bulk of those
surveyed by Reuters said they expect the bank to keep the
overnight lending rate steady through the remainder of the year.
    "We don't see any need to reduce the rate, we don't see a
big slowdown in the economy," said Carmen Elena Salcedo, an
analyst at brokerage Corficolombiana. 
    The monetary authority has already metered into its analysis
a likely slowdown in the domestic economy - as industrial output
falls and retail sales weaken - and the level is within the
board's expectations and manageable, the economists said. 
    The central bank earlier this month revised its 2012
economic growth forecast, lifting the lower part of the range to
3.7 percent from 3 percent but lowering the top end to 4.9
percent from 5 percent. 
    "With the economy very close to its maximum potential,
there's neutrality in the economic variables and less worry
about the external situation," said Cesar Corredor, an analyst
at Banco de Bogota. "That doesn't warrant a monetary policy
decision." 
    Still, three economists are betting the board will seek to
bolster economic growth and cut the lending rate 25 basis points
to provide stimulus to manufacturers and other sectors that have
shown signs of slowing. 
    Industrial output for September fell 1.3 percent, its second
straight contraction. Retail sales rose a moderate 2.3 percent,
much below the average of about 7 percent for this time of year.
    The central bank set a target range for inflation this year
at the mid-point of 2 percent to 4 percent. Annual consumer
prices in October reached 3.06 percent, lower than 3.08 percent
in the previous month. The government will release data for
November on Dec. 5.
    "There's stability in inflation, meeting the bank's goal of
3 percent, and the signs of deceleration lead us to think that
there will be countercyclical monetary policy," this month,
Sergio Clavijo, head of ANIF, a financial association, told
reporters on Tuesday.
    The central bank took advantage of decent inflation to cut
the lending rate 25 basis points in both July and August to help
shield the nation from any fallout from economic turmoil
overseas. Since then, it has held the rate.  
    "This latest number for industrial output leads to a
deterioration in estimates and justifies further stimulus," said
Juan Camilo Santana, an analyst at brokerage Profesionales de
Bolsa.
    Following are the results of the survey: 
 
 ENTITY                      MEETING     END   END
                             NOVEMBER    2012  2013
 ANIF                       -25 BASIS    N.A.  N.A.
                              POINTS           
 NOMURA SECURITIES          -25 BASIS    4.50  4.5
                              POINTS           
 COLFONDOS                  -25 BASIS    4.50  5.00
                              POINTS           
 BULLTICK CAPITAL MARKETS   UNCHANGED    4.75  4.75
 BANCOLOMBIA                UNCHANGED    4.75  4.75
 CORREDORES ASOCIADOS       UNCHANGED    4.75  5.00
 CORFICOLOMBIANA            UNCHANGED    4.75  5.00
 GRUPO BOLIVAR              UNCHANGED    4.75  5.25
 BANCO DE BOGOTA            UNCHANGED    4.75  4.75
 BANCO DE OCCIDENTE         UNCHANGED    4.50  5.00
 GRUPO HELM                 UNCHANGED    4.75  4.75
 ASESORES EN VALORES        UNCHANGED    4.75  5.25
 ACCIONES Y VALORES         UNCHANGED    4.75  4.75
 COLPATRIA                  UNCHANGED    4.75  4.50
 ULTRABURSATILES            UNCHANGED    4.75  4.75
 PROFESIONALES DE BOLSA     UNCHANGED    4.75  5.25
 DANN REGIONAL              UNCHANGED    4.75  4.50
 ALIANZA VALORES            UNCHANGED    4.75  4.75
 CITIBANK                   UNCHANGED    4.75  5.00
 BARCLAYS CAPITAL           UNCHANGED    N.A.  N.A.
 BOLSA Y RENTA              UNCHANGED    4.75  4.75
 MORGAN STANLEY             UNCHANGED    N.A.  N.A.
 GLOBAL SECURITIES          UNCHANGED    4.75  5.50
 BofAML                     UNCHANGED    N.A.  N.A.
 ASOBANCARIA                UNCHANGED    4.75  4.50
 CAPITAL ECONOMICS          UNCHANGED    4.75  4.25
 ALLIANZ                    UNCHANGED    4.75  5.00
 UBS                        UNCHANGED    N.A.  N.A.
 HSBC                       UNCHANGED    N.A.  N.A.
                                                 
 Participants                   29        29    29
 Median                        4.75      4.75  4.75
 Minimum                       4.50      4.50  4.25
 Maximum                       4.75      4.75  5.50
 
 (Additional reporting by Eduardo Garcia; Writing by Helen
Murphy; Editing by Andrew Hay and David Gregorio)
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