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Colombia Monetary Policy September 2019

Colombia: Central Bank stays put in September amid on-target inflation

Colombia’s Central Bank (BanRep) held the benchmark interest rate unchanged at 4.25% at its latest Board of Directors meeting on 23 September. The decision, which was unanimous and in line with market expectations, means that the rate has remained at the same level since 27 April 2018—when it was cut by 25 basis points.

The Bank held rates in light of within-target inflation in August and improved growth expectations for the second half of the year. Although inflation increased in recent months due to supply-side volatility, core inflation remains close to the midpoint of the 2.0%–4.0% target band. This, coupled with signs of strengthening economic activity thanks to healthy credit growth in Q3, prompted the Bank to stay put in September and raise its growth outlook for the year from 3.0% to 3.2%.

Looking ahead, the Bank expects price pressures to recede and converge within the target level towards the end of the year as supply-side shocks subside. While a minority of FocusEconomics panelists project a rate hike before year-end, a larger share projects the Bank not doing so until 2020.

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

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