By Nelson Bocanegra
BOGOTA (Reuters) -Colombia's central bank board raised the benchmark interest rate by 75 basis points to 12.75% on Friday, a softer increase than expected by a majority of analysts as the board continues to grapple with high inflation.
The interest rate is at its highest since November 1999.
"Both total inflation (13.1%) and core inflation - excluding food and regulated items - (9.5%) continued their upward trend in December, reaching records higher than those estimated by the bank's technical team and market analysts," board chief Leonardo Villar said, reading from a statement.
The two board members who voted for a 25 basis point increase think it would be enough to reign in inflation, Villar said.
Inflation is expected to reach an estimated 13.5% in the first quarter, before falling around half by the end of 2023.
The five policymakers who backed the 75 basis points hike also want to brake inflation, Villar said, as the bank seeks to bring consumer price growth to its 3% long-term target.
Eight of 15 analysts surveyed last week by Reuters said the seven-member board would increase borrowing costs by 100 basis points to 13%, while four expect a 75 basis points rise and the remaining three expect a half-point uptick.
The board has not necessarily closed its tightening cycle, Villar said, despite predictions that Friday's rise would be the last.
The bank revised its growth projection for this year down to 0.2%, from a previous 0.5%, but maintained its 2022 projection at 8%.
The growth rate of credit has slowed, the board added, which favors a moderation in expansion, especially in the fourth quarter.
The increase puts the bank in line with its international counterparts like the Federal Reserve, which is expected to raise rates again.
The policymakers have increased the rate by a total of 1,100 basis points since the tightening cycle began in September 2021.
Analysts have predicted the board will begin cutting the rate mid-year, taking it to 11% by the end of 2023.