Colombia: Central Bank keeps key policy rate unchanged, reduces pace of FX intervention
September 27, 2013
The Central Bank (BanRep) left its reference interest rate unchanged at 3.25% at its most recent monetary policy meeting, which took place on 27 September. The wide majority of LatinFocus Consensus Forecast panelists had expected the Bank to make this decision. The key policy rate has been at the current level since March 2013, which is the lowest level since February 2011.
BanRep stated that growth in advanced economies is recovering, whereas economic activity slowed in emerging markets. The Bank noted that domestic growth expanded at a faster-than-expected pace in the second quarter and that it had accelerated in the third quarter. In terms of price developments, the Central Bank stated that August's annual inflation figure of 2.3% was in line with the Central Bank's projections. As a result, inflation is still within the Bank's tolerance margin of plus/minus 1.0 percentage points around its 3.0% target.
The Bank reduced its purchases of foreign currency at the September meeting. The Bank announced that it will buy up to USD 1.0 billion during the October-December period, which is down from the at least USD 2.5 billion purchased between June and September. The next policy meeting is scheduled for 25 October.
LatinFocus Consensus Forecast panelists see the policy rate at 3.23% at the end of 2013. Panelists expect the policy rate to end next year at 4.26%.