Friday, March 23, 2012

Central Bank of Colombia Holds Rate at 5.25%

The Central Bank of Colombia held its monetary policy interest rate unchanged at 5.25%.  The Bank said [translated]: "The risks to inflation from expectations have moderated. Which may arise from the behavior of credit demand or remain. According to the present assessment of the balance of these risks, the Board decided to keep interest rate unchanged for intervention. The new information will enable new monetary policy actions to follow. The Board will continue careful monitoring of the international situation, behavioral, and projections of inflation, growth, behavior of asset markets and reiterated that monetary policy will depend the new information."

The Central Bank of Colombia last hiked the rate 25 basis points at its January and February meetings this year, while its previous change was an increase of the interest rate by 25 basis points to 4.50% at its July monetary policy meeting, following a 25bp increase in June last year.  Colombia reported annual inflation of 3.55% in February, 3.6% in December, 3.96% in November, 3.73% in September, 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%).

Colombia reported a spike in annual GDP growth to 7.7% in the September quarter of 2011, compared to 4.8% in the June quarter and 5.1% in the March quarter, while the bank previously said the 2011 full year forecast of 4.5% - 6.5% is highly probable.  The Colombian peso (COP) has gained about 6% against the US dollar over the past year, while the USDCOP exchange rate last traded around 1,760


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