BOGOTA (Reuters) - Colombia’s central bank board will hold the benchmark interest rate steady at its Friday meeting, in a bid to add more steam to the economy even as inflation expectations rise, analysts said in a Reuters survey on Wednesday.
The 18 analysts agreed the seven-member board will hold the rate at 4.25 percent, where it has stayed since April 2018.
Those surveyed said still-weak economic activity will motivate the policymakers to continue expansionary monetary policy for the remainder of the year.
The bank will probably reduce its gross domestic product growth estimate for the year, the analysts said, after the market and board chief Juan Jose Echavarria showed disappointment with first quarter expansion of 2.8 percent.
The bank’s current growth estimate is 3.5 percent.
Construction was the worst-performing sector from January to March and will continue to damage economic expansion during the rest of the year, analysts said.
“Although we think domestic demand will continue to recover, especially because of investment in sectors other than construction, the first quarter results showed that investment (in construction) will continue taking away from GDP in the near future,” said Scotiabank’s Sergio Olarte.
Analysts’ growth expectations for 2019 were down to 3.15% in the survey, from 3.25% in the most recent poll in April.
Inflation estimates for the year were up to 3.41% from 3.3% in the previous survey and further from the bank’s target of 3%.
In June consumer prices will rise 0.19%, the analysts said, sending 12-month inflation to 3.35%.
Reporting by Nelson Bocanegra; Writing by Julia Symmes Cobb; Editing by Helen Murphy and Steve Orlofsky