POLL-Colombia's central bank to cut interest rate as downward rate cycle nears end -analysts

By Nelson Bocanegra

BOGOTA, Aug 27 (Reuters) - Colombia's central bank will lower its benchmark interest rate by another 25 basis points at its meeting this month, the last cut in a downward cycle aimed at boosting economic recovery, a majority of analysts said in a Reuters poll on Thursday.

Responding to questions, 16 of 17 analysts predicted the bank will lower its interest rate to a new historic low of 2% at a meeting on Monday. One analyst from BNP Paribas expects the rate to be held at 2.25%.

A cut would be the sixth in a row - for a total reduction of 225 basis points since March - as the bank looks to soften the blow of a prolonged coronavirus quarantine, which caused thousands of businesses to shutter and joblessness to soar.

Additional cuts will depend on future data, said Itau's chief economist in Colombia, Carolina Monzon.

"The evolution of the external imbalance and the gradual reopening (of the economy) will be key in the decision-making of future monetary policy meetings, where the possibility the downward cycle will end looks more and more likely," said Monzon, who expects the rate to remain unchanged until mid-2022 following a cut this month.

From September, the Andean country will enter a "selective" quarantine, during which large events and gatherings will remain off-limits while the government evaluates the spread of the virus.

Nine of 15 analysts predicted the interest rate will finish the year at 2%. Three expect an additional cut to 1.75%, while two expect it to close at 1.5%. One expects the rate to stay at 2.25%.

The government expects Colombia's economy to contract 5.5% this year, an optimistic view compared with the majority of analysts, ratings agencies and even the central bank, with forecasts ranging between 6% and 10%.

(Reporting by Nelson Bocanegra; Writing by Oliver Griffin; Editing by Dan Grebler)

((Oliver.Griffin@thomsonreuters.com; +57 304-583-8931;))

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