Colombia: Central Bank keeps interest rates unchanged
April 26, 2013
At its latest monetary policy meeting on 26 April, the Central Bank (BanRep) maintained its reference interest rate at 3.25%, after the 50 basis-point rate cut seen in March. This decision, widely expected by LatinFocus Consensus Forecast panellists, marks the end of an easing cycle that started in November 2012. At the current level, the policy rate now sits at its lowest level since February 2011.
BanRep acknowledged that economic growth in Colombia's main trading partners is lower than previously expected, thereby dragging down the contribution from the external sector to economic growth. In addition, the Bank stated that domestic economic growth decelerated somewhat in the first quarter, with forward-looking indicators suggesting less dynamic private consumption and weaker industry activity in the coming months.
Regarding price developments, the Central Bank stated that both current inflation as well as inflation expectations remain well anchored below the Bank's target of 3%, with a tolerance margin of plus/minus 1.0 percentage points. Going forward, the Bank sees inflationary pressures remaining low. The next policy meeting is scheduled for 31 May.
LatinFocus Consensus Forecast panellists see the policy rate at 3.38% by the end of 2013. For next year, panellists expect the policy rate to end the year at 4.49%.