Colombia: Central Bank maintains key policy rate unchanged
June 28, 2013
At its latest monetary policy meeting on 28 June, the Central Bank (BanRep) kept its reference interest rate at 3.25%, in a decision widely expected by LatinFocus Consensus Forecast panellists. The key policy rate has remained on hold since March and, at the current level, sits at its lowest point since February 2011.
BanRep acknowledged that growth prospects in the United States and Japan remain somewhat bright, while the economic downturn in the Euro area will last longer than previously thought. Moreover, the Central Bank noted that the possibility that the Fed will taper its QE program sooner than expected has unnerved financial markets, driving up bond yields and strengthening the greenback. On the domestic front, monetary authorities stated that domestic demand slowed in the first quarter, albeit in line with the Bank's projections, whereas recent economic indicators point to a pick-up in activity in the second quarter.
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.
LatinFocus Consensus Forecast panellists see the policy rate at 3.31% by the end of 2013. For next year, panellists expect the policy rate to end the year at 4.39%.