By CentralBankNews.info
Colombia’s central bank maintained its benchmark intervention rate at 3.25 percent, as expected, and said it would continue with its dollar-buying program for the three months of April through June, purchasing up to US$ 1 billion.
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 rates remain at a level that stimulates aggregate spending as inflation converges towards the 3 percent target.
“In short, economic growth accelerated in the second half of 2013 and inflation continued to rise in February,” the bank said.
Colombia’s inflation rate rose for the third consecutive month in February to 2.32 percent, within the bank’s 2.0 to 4.0 percent tolerance range after it was below 2.0 percent in October through December.
Inflation expectations one-year ahead and those based on short-term public debt remain around 3.0 percent, the bank added.
In February the central bank’s governor 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 of the peso.
Colombia’s Gross Domestic Product expanded by 0.8 percent in the fourth quarter of 2013 was the third quarter for annual growth of 4.9 percent. For the full year, growth was 4.3 percent, up from 4.0 percent for 2012.
“The recent growth of retail sales, coffee production, energy consumption and further falls in unemployment suggest a strong dynamic of the economy so far this year,” the bank said.
However, the decline in consumer confidence in February, weak exports and manufacturing point in the opposite direction, the bank said, adding that the bank forecast growth this year between 3.3 percent and 5.3 percent, with 4.3 percent the more likely outcome.
The central bank has been intervening in foreign exchange markets for more than two years to counter an appreciation of the peso to help its export industry. Its intervention program for January through March was also budgeted at $1 trillion.
Colombia’s peso has depreciated gradually through 2013 and in the first few months of 2014, but on March 17 the peso reversed course and started rising. Today it was quoted at 1,993 to the U.S. dollar, down 3.1 percent since the beginning of the year.
