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Colombia Monetary Policy December 2019

Colombia: Central Bank keeps rate unaltered in December

Colombia’s Central Bank (BanRep) kept the benchmark interest rate on hold at 4.25% at its latest Board of Directors meeting on 20 December. The decision was unanimous and widely expected by the markets. The rate has thus remained at the same level since 27 April 2018 when it was cut by 25 basis points.

The Bank’s decision to stay put was largely driven by within-target inflation and robust growth dynamics. Although supply shocks have kept price pressures close to the ceiling of the Bank’s target range of 3.0% plus or minus 1.0 percentage point throughout the year, the Bank considers these to be transitory and sees inflation continuing to converge to the Bank’s target of 3.0%. Meanwhile, the Bank kept its growth projection for 2019 at 3.2% amid solid economic activity, which further supported the decision to keep the rate unchanged.

Looking ahead, the Bank maintained its patient stance and signaled that monetary policy ought to remain stable for a longer period of time. However, the Bank will closely monitor inflation and economic activity and will be alert to developments related to the balance of payments and the external context. Thus, monetary policy “will depend on the new information available”.

The next monetary policy meeting will be held on 31 January.

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