* Bank maintains inflation target for 2013
* Global slowdown hitting exports, industry
* Cenbank vote was 4 in favor, 3 against - Santos
(Adds Santos statement on vote)
By Helen Murphy and Nelson Bocanegra
BOGOTA, Nov 23 Colombia unexpectedly cut its key
interest rate on Friday to counter a slowdown in Latin America's
fourth-largest economy due to global uncertainty and weaker
Colombia's central bank cut the lending rate a quarter of a
point to 4.50 percent - surprising economists - in a bid to
boost 2013 growth amid weakness in the Andean nation's
industrial sector and exports.
In a Reuters survey on Wednesday, only three of 29
economists expected the bank to cut its rate. The rest expected
the overnight lending rate to remain steady.
Having kept rates on hold the past two months, Colombia
joined other Latin American countries such as Brazil that have
cut borrowing costs to shield their domestic economies from
slack demand overseas.
"The weakness of the global economy and the decline in
domestic demand has been reflected in lower export growth and a
contraction in industrial production," central bank chief Jose
Dario Uribe said after revealing the rate cut.
The decision by the bank's seven-member board was not
unanimous, he said.
Colombian President Juan Manuel Santos, whose finance
minister is on the board, said that four members voted in favor
of a cut and three against. The exact count of the vote is
rarely published, and eve n the minutes do not give the breakdown
"I congratulate (Finance Minister Mauricio Cardenas) because
you won the vote today 4- 3 to lower the central bank interest
rate...I believe it should help to stimulate the economy more,"
Santos said in the coastal city of Cartagena.
The government has been under pressure from industrialists
and exporters to slash the rate given the weakening of some key
economic indicators su ch as r etail sales and industrial
production and that a strong peso currency is hurting exporters'
The shrinking industrial production has set off alarms that
weak overseas demand for Colombia's manufactured goods may put
pressure on factories just as the jobless rate is falling.
Industrial output has dropped in five of the last seven
months, ending with a 1.3 percent decline in September.
"What has changed in this statement is that they are
recognizing that there's a weakening in the local dynamic. That
is what brought about this cut," said Camilo Perez, an economist
at Banco de Bogota.
"They are seeing a bigger slowdown that goes beyond just
industry; it's a general weakening."
The yield on Colombia's benchmark treasury bonds maturing in
July 2024 fell after the rate decision, closing down 13 basis
points to 6.02 percent from 6.15 on Thursday.
Cardenas on Wednesday called the industrial sector
"stagnant" and indicated he would support lower borrowing costs
to spur expansion.
Retail sales had a modest 2.3 percent growth in September,
well off last year's 8.1 percent rise but in line with a
reduction in household spending after the bank slowed lending
earlier in 2012 by raising reserve requirements on consumer
The bank had been concerned households were taking on too
It expected a gradual recovery in overseas demand for
Colombia's products, stable commodity prices and ample
international liquidity to boost economic growth next year.
"The reduction in interest rates, including (Friday's),
employment stability and favorable household confidence will
likely sustain a recovery in consumer growth," the central
bank's Uribe said.
At the bank's October meeting, some board members had argued
for a rate cut based on controlled inflation and the likelihood
of a deceleration in economic growth.
On Friday, the bank set next year's inflation target at
between 2 percent to 4 percent -- the same as this year.
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.
"This (rate cut) reflects the risks that are beginning to
materialize in terms of economic growth and concern about
developments on an international level," said Daniel Velandia,
director of economic studies at brokerage Correval in Bogota.
So far the nation has remained largely shielded from global
economic troubles that have pummeled major Latin American
countries. Colombia's resilience to shocks was cited by Wall
Street agencies when it won back investment grade in 2011.
The bank expressed concern that financial turmoil overseas
would continue and likely cause problems for exports.
"The weak world economy and the decline in domestic demand
have been reflected in slower growth in our exports and a
contraction in industrial production," Uribe said.
Colombia's economy grew at a brisk 5.9 percent in 2011
compared with the previous year as improved security conditions
brought by a decade-long offensive against armed guerrilla
groups attracted a flood of foreign investment.
The central bank earlier this month narrowed its 2012
economic growth forecast, lifting the lower part of the range to
3.7 percent from 3 percent and lowering the top end to 4.9
percent from 5 percent.
Cutting Colombia's benchmark rate could help slow additional
upward pressure on the peso, which has attracted foreign
capital due to interest rates near zero in the developed world.
The peso has already appreciated close to 6.5 percent since
the start of the year - among the strongest world currencies.
Exporters have called for additional rate cuts in recent
months as currency appreciation raised labor and production
costs in pesos and made them less competitive abroad.
(Reporting by Helen Murphy, Nelson Bocanegra, Jack Kimball,
Monica Garcia and Carlos Vargas; Editing by Andrew Hay and Lisa