Colombia: The Central Bank stays put given rising global uncertainties
August 19, 2011
At its latest monetary policy meeting on 19 August, the Central Bank kept its reference interest rate unchanged at 4.50% after six consecutive rate hikes. The move surprised most market analysts, who had expected the Bank to again raise interest rates. According to the Central Bank, the reason behind this temporary halt in rate hikes is the high uncertainty in the global markets, which could have a negative effect on global economic growth and, consequently, on Colombia. Nevertheless, market participants consider it very likely that the Central Bank will resume its tightening cycle once the current market instability eases, as the Colombian economic fundamentals remain strong and inflationary pressures are subdued. The next monetary policy meeting is scheduled on 30 September.