By Julia Symmes Cobb and Nelson Bocanegra
BOGOTA, Jan 28 (Reuters) - Colombia's central bank board raised the benchmark interest rate by 100 basis points to 4% on Friday, the biggest monthly increase in decades as the bank tries to counter inflationary pressures.
The board was divided on how sharply to increase the rate, with five policymakers backing the 100-basis point-increase and the remaining two voting for a 75-basis-point hike.
The full-point increase was predicted by just two of 12 analysts in a Reuters poll last week, with the majority betting on a 75-point uptick.
"The results of inflation in 2021 induced a significant increase in inflation expectations measured from various sources, including non-food inflation," the board said in a statement.
The decision is compatible with a quickly recovering economy, which the bank predicts grew around 10% last year, the statement added.
The bank also revised its inflation projection to 4.3% for 2022, from 3.7% previously, and said consumer prices in 2023 would increase 3.4%, both well above its 3% long-term target.
Inflation in the Andean country hit 5.62% in 2021, the highest level in five years.
The board - which will not vote on the interest rate again until the end of March - has previously cited a minimum wage increase of 10.07% for this year as an inflationary challenge.
The sharp rise keeps Colombia in line with central banks around the region, which havebeen hiking borrowing costs on inflation concerns.
Brazil's central bank, which more than quadrupled its benchmark interest rate to 9.25% in 2021, has signaled another 150-point hike in February.
Some members of Mexico's bank have highlighted a risk to price stability posed by core inflation, which just accelerated to its highest level in over 20 years, and may raise rates again next month.
Meanwhile, the U.S. Federal Reserve has said it is likely to hike rates in March, though it is undecided on the pace of increases.
(Reporting by Julia Symmes Cobb and Nelson Bocanegra; Editing by Leslie Adler)
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