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Colombia central bank set to cut lending rate to 6.25 pct

BOGOTA, May 26 (Reuters) - Colombia's central bank board looks set to cut the key lending rate to 6.25 percent at its meeting on Friday in an effort to boost the economy, but will moderate its pace of reductions as inflation expectations tick upward.

Fifteen of 18 analysts in a Reuters survey this week predicted a reduction of 25 basis points by the seven-member board, while three said policymakers would trim the rate by 50 basis points to 6 percent.

A cut would mark the fifth reduction in an easing cycle meant to bolster Latin America's fourth-largest economy, which was hit hard by the global fall in prices for crude oil as it also struggled with high inflation.

At the bank's April meeting policymakers made a sharper cut of half a percentage point in a bid to encourage expansion.

Inflation expectations for the close of this year were up to 4.45 percent in the poll, from 4.40 percent in April, above the bank's long-term target range of 2 percent to 4 percent.

"Basic inflation expectations are standing still, which will reduce the speed of rate reductions," said Daniel Escobar, chief economist at Global Securities.

The bank predicts 2017 growth at 1.8 percent, well below the government target of 2.5 percent.

"I think the balance of risks right now is leaning toward more economic deceleration," said Sergio Olarte, chief economist at BTG Pactual's brokerage in Colombia. (Reporting by Nelson Bocanegra; Writing by Julia Symmes Cobb; Editing by James Dalgleish)