Central Bank of Colombia

Colombia Central Bank holds Interest rates in the first week of March

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2nd March 2014

Colombia’s central bank held its policy intervention rate steady at 3.25 percent, saying interest rates were appropriate because they are stimulating spending while inflation is converging toward the bank’s 3.0 percent target.
    The Central Bank of Colombia, which has held rates steady since April 2013 after cutting them by 100 basis points in the first three months of last year, said economic growth in 2014 is still projected to expand by 4.3 percent after likely growth of 4.1 percent in 2013 within a range of 3.7-4.3 percent.
    For the fourth quarter, the central bank’s staff is projecting growth of 4.6 percent, up from 4.5 percent forecast by the central bank in January, the bank said after a meeting of its board on Friday.
    Investment is increasing by the largest amount while household consumption is growing at its historical average rate. Exports are also accelerating but at a rate that is lower than imports.
    Colombia’s Gross Domestic Product expanded by 1.10 percent in the third quarter from the second quarter for annual growth of 5.1 percent, the fastest rate in six quarters and up from 3.9 percent in the second quarter.
   Colombia’s inflation rate rose to 2.13 percent in January, within the central bank’s 2.0 to 4.0 percent target range with core inflation at 2.55 percent. Inflation expectations one year from now are around 3.0 percent.
    The central bank added that the rate of credit growth slowed in January but was still higher than the growth of nominal GDP.
    Last month the central bank’s governor, Jose Dario Uribe, said inflation was likely to rise to between 2.5 and 3.0 percent this year after falling to 1.94 percent in 2013, helped by a depreciation in the peso against the U.S. dollar that is raising import prices

Colombia holds rate, inflation seen moving toward target – Central Bank News.

Colombia Central Bank holds rate steady at 3.25%

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Colombia holds rate steady at 3.25% after seven cuts – Central Bank News.

Colombia’s central bank held its benchmark interest rate steady at 3.25 percent, as expected, saying the economy continues to grow below its potential and inflation is below 3.0 percent but it is “particularly difficult to interpret current trends in economic activity and its projection.”
    But recent rate cuts and proposed fiscal policy measures should help raise economic growth toward the country’s productive capacity and this will help inflation move closer to the central bank’s target.
    “In this context, the balance of risk assessment indicates the need to maintain the policy interest rate at 3.25%, while waiting for more information,” the central bank said.
    The Central Bank of Colombia central bank has cut rates seven times by a total of 200 basis points since July last year, most recently by 50 basis points in March.
    Economic activity in the first quarter of this year has slowed from 2012, the central bank said, with household consumption growing at a slower rate along with a deterioration in industry.
    But the recent behaviour of some components of aggregate spending and fewer working days in the first quarter compared with last year has made it difficult to interpret current trends, the bank said.
    “However, economic growth is expected to increase throughout the year in reaction prior monetary policy actions and programs recently announced by the national government,” the bank said.

    The central bank’s staff forecasts that Colombia’s Gross Domestic Product should expand by 3-5 percent this year, with 4.3 percent the most likely figure, up from 2012’s 4.0 percent last year. In 2011 Colombia’s economy grew by 6.6 percent.
    Colombia’s government has proposed a wide-ranging 5 trillion peso stimulus plan to revive industry and agriculture,  boost housing, reduce energy costs and measures to cut company costs.
     Colombia’s inflation rate accelerated slightly to 1.91 percent in March from a 60-year low of 1.83 percent in February, but still well below the central bank’s target range of 2-4 percent.

    www.CentralBankNews.info