Friday, November 25, 2011

Colombia Central Bank Lifts Rate 25bps to 4.75%

The Central Bank of Colombia increased its monetary policy interest rate 25 basis points to 4.75% from 4.50%.  The Bank said [translated]: "Given the central forecast described above, and the risks of financial imbalances, the Board considers it prudent to increase 25 basis points interest rate intervention and believes that this movement is achieved monetary stance which helps to maximize the growth of output and employment consistent with the achievement of future targets for inflation. This decision also includes the possibility of early detection of a substantial change in external conditions of the economy and to react quickly to it."

The Central Bank of Colombia's last change was an increase of the interest rate by 25 basis points to 4.50% at its July monetary policy meeting this year, following a 25bp increase in June.  Colombia reported annual inflation of 3.73% in September, compared to 3.27% in August, 3.42% in July, 3.23% in June, 3.02% in May, and 2.84% in April; which compares to the Bank's inflation target of 3% (+/- 1%).  Goldman Sachs had previously forecast 2011 GDP growth at 5.5%, while Morgan Stanley had forecast just 4.9% growth for the Colombian economy.  

Colombia reported annual GDP growth of 4.8% in the June quarter and 5.1% in the March quarter, while the bank said the 2011 full year forecast of 4.5% - 6.5% is highly probable.  The Colombian peso (COP) has weakened about 1% against the US dollar so far this year, while the USDCOP exchange rate last traded around 1,950.5


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