By Nelson Bocanegra
BOGOTA, July 31 (Reuters) - Colombia's central bank board is expected to raise its benchmark interest rate on Friday in a bid to curb inflation, at the final policy meeting set to be attended by the Finance Minister German Avila, whose administration has had a tense relationship with the bank.
In a Reuters poll earlier this week, 16 of 25 analysts forecast a 50-basis-point increase to 12.50%, while three projected a 75-basis-point hike to 12.75%. One expected a 25-basis-point increase and five forecast no change.
If the majority view is met, it would be the fourth rate increase this year, bringing total tightening to 275 basis points.
"We expect the bank to raise the interest rate again in response to accelerating inflation and the persistent de-anchoring of expectations, which have remained above the target range for 11 months," investment holding company Corfi said in a note. "In this context, we believe the bank will maintain the pace of tightening seen in June to reinforce the credibility of monetary policy and steer inflation toward target in 2028."
Analysts anticipate a split decision among the seven board members. Finance Minister Avila has repeatedly voted in favor of cutting rates and, alongside outgoing President Gustavo Petro, has frequently criticized the board.
Right-wing President-elect Abelardo De La Espriella, who won last month's election, will be sworn in on August 7. The market's preferred candidate, he has pledged to respect the central bank's independence.
Annual inflation stood at 6.14% in June, the highest level in two years and more than double the central bank's 3% target, putting Colombia on track to miss that goal for a sixth consecutive year.
Central bank board head Leonardo Villar said last month staff forecasts pointed to inflation ending 2027 at around 4%, also above target.
Markets expect any increase on Friday to mark the end of the current tightening cycle.
In the Reuters poll, expectations for the benchmark rate at the end of this year rose to 12.50% from a previously forecast 12.25%, while end-2027 expectations increased to 11.25% from 10.50%.
(Reporting by Nelson Bocanegra; Editing by Sanjeev Miglani)