Colombia Monetary Policy


Central Bank leaves key policy rate unchanged in March

The Central Bank (BanRep) kept its reference interest rate unchanged at 3.25% at its 21 March monetary policy meeting. This decision was on par with market expectations. The key policy rate sits at the lowest level since February 2011, where it has remained since March 2013. BanRep justified its decision by restating similar arguments provided in last month's monetary policy meeting. The Bank left the annual growth outlook for the Colombian economy unchanged at 3.3% to 5.3%, and indicated that growth of 4.3% is the most likely value. As for the global growth outlook, the Central Bank pointed out that the economic recovery in advanced economies remains on track, while it underestimated the weakness in emerging markets. Furthermore, the Bank recognized that the Colombian peso weakened against the U.S. dollar because of a less accommodative international monetary policy. With respect to domestic developments, the Bank stressed that economic indicators indicate that both in the full year 2013 and in Q4 domestic growth was strong and mainly driven by domestic demand and investment. In terms of price developments, the Bank stated that annual inflation rose in February and remained within the Central Banks's tolerance margin of plus/minus 1.0 percentage points around its 3.0% target. The next policy meeting is scheduled for 25 April. LatinFocus Consensus Forecast panelists see the policy rate at 4.19% at the end of 2014. Panelists expect the policy rate to end 2015 at 4.87%.

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Colombia Monetary Policy Chart

Colombia Monetary Policy March 2014

Note: Central Bank policy rate in %, eop.
Source: Colombia Central Bank.

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