Colombia: Central Bank stays put in May
May 31, 2013
At its latest monetary policy meeting on 31 May, the Central Bank (BanRep) maintained its reference interest rate at 3.25%, in a decision widely expected by LatinFocus Consensus Forecast panellists. At the current level, the policy rate sits at its lowest level since February 2011.
BanRep acknowledged that growth in the United States continues on a recovery path, while the Eurozone economy remains in the doldrums. Moreover, growth in emerging economies is lower than previously expected, which will reduce demand from overseas. On the domestic front, the Bank stated that recent indicators point to stronger economic activity in the second quarter compared to the first.
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. Simultaneously, the Bank announced that it will continue its purchases of foreign currency, by buying at least USD 2.5 billion between June and September. This figure is down from the USD 3.0 billion set for the previous four-month period. The next policy meeting is scheduled for 28 June.
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%.