By Nelson Bocanegra and Carlos Vargas
BOGOTA, Oct 30 (Reuters) - Colombia's central bank board voted by majority to hold its benchmark interest rate at 12.25% on Friday, amid estimates predicting slower economic growth and uncertainty over the evolution of public finances.
The board also approved the purchase of $2 billion from the government, to shore up the bank's reserves, board chief Leonardo Villar told a press conference.
A minority of the market had expected the hold, with 13 out of 31 analysts
in a Reuters poll this week predicting an unchanged rate. Seventeen said the board would raise the benchmark rate to 12.5%, while one forecast a 75-basis-point increase to 13%.
"Annual growth in the Colombian economy is estimated to have slowed in the third quarter compared with the previous quarter. Domestic demand indicators point to slower growth in both private and public consumption," the board said in a statement. Third-quarter economic performance figures are due in mid-November.
"The evolution of public finances is a key factor for future macroeconomic performance and for monetary policy efforts to bring inflation back to target," the statement said, adding there must be "rigorous review" of a fiscal reform sent to congress by the government on Thursday.
The government of new right-wing President Abelardo De La Espriella says the bill is aimed at cutting public spending by about 15%, raising revenue through tax measures and averting a deeper deterioration in the country's public finances.
Inflation, which has remained stubbornly above the bank's long-term 3% target for nearly six years, increased less than expected in September, the board said, though the El Niño weather phenomenon continues to represent a risk.
Annual inflation was 6.29% through last month.
Villar said it was not yet clear whether the bank's cycle of increasing borrowing costs has ended.
The US Federal Reserve and Chile's central bank also kept their rates unchanged this week.
Raising interest rates now might not have the same impact on inflation as it would have at another time, central bank board member Laura Moisa told Reuters this month, but could affect investment decisions.
The reserves purchase is at the request of the finance ministry and is in addition to the bank's accumulation program, which it has been carrying out through auctions since August.
"This decision takes into account that the government has dollars available for sale and comes at a time of high international uncertainty... when it is advisable to hold more international reserves," Villar said.
(Reporting by Nelson Bocanegra and Carlos Vargas; Editing by Julia Symmes Cobb and Jamie Freed)
