Colombia holds rate, sees steady growth, inflation

October 26, 2018

By CentralBankNews.info
      Colombia’s central bank left its key interest rate steady at 4.25 percent, as expected, saying data shows that economic activity in the third quarter was similar to that seen in the first half of the year while inflation is converging to the 3.0 percent target.
      The Central Bank of Colombia (CBC), which moved into a neutral stance following a rate cut in January this year, added the bank’s board was unanimous in its policy decision.
      Between December 2016 and January this year the CBC lowered its benchmark rate by 325 basis points.
      Colombia’s inflation rate rose to 3.23 percent in September from 3.1 percent in August while there was little change in inflation expectations, which remain above 3.0 percent.
       Economic growth among Colombia’s trading partners has been somewhat weaker than expected and global risk aversion has risen, slightly increasing the risk premium of emerging countries, including Colombia, leading to further currency depreciation, CBC said.
       Colombia’s economy grew by an annual 2.8 percent in the second quarter, up from 2.2 percent in the first quarter but central bank staff estimate that output remains below potential.
       Colombia’s current account deficit, which has narrowed in the last two years, is estimated to be similar in proportion to gross domestic product in 2018 as in 2017, the central bank added.
      In 2017 the current account deficit narrowed to 3.3 percent of GDP, down from 4.3 percent in 2016 and 6.4 percent in 2015.
      Colombia’s peso has been falling since April this year, with the pace of decline fairly rapid in the last two weeks. The peso was trading at 3,180 to the U.S. dollar today, down 6.2 percent this year.

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