Colombia's central bank held its benchmark interest rate steady at 3.25 percent and while it trimmed its growth forecast for this year the Central Bank of Colombia struck a slightly more confident tone about the country's economic prospects.
Economic growth in the second quarter is forecast to be between 2.5 and 4.0 percent, with 3.4 percent the most likely outcome, above the first quarter's annual growth rate of 2.8 percent, the bank said, noting that exports were stronger, consumer confidence was up along with retail sales, indicating an acceleration in private consumption.
On the supply side, mining, agriculture and trade accelerated and the decline in industry was less pronounced, the central bank said.
Colombia's central bank has held rates steady since April after cutting them by 200 basis points since July 2012, but it repeated that economic growth should strengthen during the year in response to past rate cuts and the government's $2.7 billion stimulus program from April.
The central bank's staff trimmed its 2013 growth forecast to between 3.0 and 4.5 percent, with the most likely outcome between 4.0 and 4.3 percent due to slower global growth and weaker-than-expected private spending.
The central bank previously forecast growth in a range of 3.0-5.0 percent, with 4.3 percent the most likely outcome, compared with 2012 growth of 4.0 percent, down from 2011's 6.6 percent.
As other emerging market currencies, Colombia's peso dropped in May and June and bond yields rose, but the central bank said this was partially reversed in July along with lower risk premiums and rates on government debt.
Last year the central bank embarked on a program to intervene in foreign exchange markets to keep the peso from rising - it rose by 10 percent against the U.S. dollar - but a 6.3 percent depreciation this year so far has brought the peso back to the around the level of January 2012 when it was trading at 1,938 to the U.S. dollar compared with 1,887 today, a depreciation of only 2.6 percent.
This year the central bank renewed its intervention program and in May it said it would continue to buy foreign exchange worth at least $30 million a day through September to keep the peso from rising and thus help its exporters.
Colombia's inflation rate rose to 2.16 percent in June, the highest in six months, and up from 2.0 percent in May, but the bank said inflation expectations were anchored around its 3.0 percent target.