Colombia's central bank will hold the benchmark interest rate steady at its meeting this week, an indication that a year-long cycle of rate hikes has curbed inflation concerns, a Reuters poll showed on Tuesday. The central bank will hold the interest rate at 5.25 percent at Monday's meeting, according to all 30 analysts surveyed.
The bank left the lending rate unchanged in March after the seven-member board increased the rate a total of 225 basis points during the course of a year.
The Andean nation's economy has benefited from a massive influx of foreign investment after a military campaign against Marxist rebels and drug traffickers made expansion in oil and gas exploration in rural Colombia safer.
Like other emerging markets, Colombia faces the challenge of whether to hike the lending rate to combat inflation - putting upward pressure on currencies by making assets more attractive - or fight peso appreciation and risk inflation.
"When there's no risk of inflation, the central bank board is in no hurry to adjust the rate," Daniel Lozano, an analyst at Serfinco, said.
The March hold on the key rate moved Colombia more in line with other emerging markets, like Chile, where central banks have cut or held lending rates to guard their economies against fallout from the debt crisis in Europe and a global slowdown.
"The bank is expected to continue the decision of last month," Carlos Torres, a director at brokerage Asesores en Valores, said. "The perception is that the rate will remain stable while inflation expectations are contained and the external sector continues to be a worry."
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