Colombia's central bank likely to keep benchmark interest rate unchanged at final meeting of 2025

By Nelson Bocanegra

BOGOTA, Dec 19 (Reuters) - Colombia's central bank is expected to leave its benchmark interest rate unchanged at its final meeting of the year on Friday, amid uncertainty about the pace of inflation's decline at a time when the economy is performing ?well. In a recent Reuters poll, 23 of the 26 analysts polled forecast that the central bank's ?board will maintain the benchmark rate at its current 9.25% level. Borrowing ?costs have been unchanged since a rate cut in ?April. A minority of ?respondents projected the board will raise the rate by 25 basis points to 9.50% on ?expectations that consumer prices may take longer ?to return to the central bank's long-term 3% target.

The decision will likely not have the unanimous support of the seven board ?members, as some - including Finance ?Minister German Avila - continue ?to push for a cut in a bid to stimulate higher economic growth.

A decision to hold the rate steady would likely be ?spurred by "the unanchoring of inflation expectations, the uncertainty about the increase in the minimum wage in 2026, the dynamism of private consumption, the persistence of fiscal risks and the increase in the current account deficit driven by imports of consumer goods," according to investment holding company Corfi.

Some government officials ?believe ?President Gustavo Petro may issue a double-digit increase in the minimum wage, much higher than this year's accumulated inflation, which is expected to ?close at around 5.2%. If those inflation expectations are met, the South American country will have failed to meet its inflation target for a fifth consecutive year and could be on the path to missing it again in 2026.

Central bank board member Bibiana Taboada said last week that more may need to be done with ?monetary policy to moderate domestic demand growth, fueling expectations among some market participants of a coming upward rate cycle.

The survey showed that expectations for the benchmark interest rate at the end ?of 2026 increased to 9.50%. (Reporting by Nelson Bocanegra; Editing by Paul Simao)