Friday, October 25, 2013

Colombia holds rate, says downside risks may have risen

    Colombia's central bank held its benchmark interest rate steady at 3.25 percent, as expected, and said economic growth this year would be similar to last year but downside risks were "not negligible and may have increased recently."
    The Central Bank of Colombia, which has held rates steady since April after cutting by a combined 100 basis points in the first three months of the year, said "growth of the United States may have suffered as a result of a partial closure of the federal government and increased uncertainty," while some emerging economies were expanding at a slower pace and China's growth was higher than expected by financial markets.
    The U.S. Federal Reserve's decision to delay tapering its asset purchases had partly reversed the rise in interest rates from May and there was a decrease in the risk indicators for Latin American countries and a slight appreciation of their currencies.
    In September the central bank also forecast growth this year similar to 2012's 4.2 percent, and earlier this month the bank's governor predicted growth of 4 percent or slightly more. The central bank said it was projecting 2013 growth of between 3.5 and 4.5 percent.
    "In Colombia, the available data for the third quarter suggest that economic activity expanded at a faster pace than in the first half of the year, driven by investment," the bank said, echoing last month's statement.
    Colombia's Gross Domestic Product expanded by an annual 4.2 percent in the second quarter, up from 2.8 percent in the first quarter.
    Colombia's inflation rate was steady at 2.27 percent in September and August and the bank said expectations were anchored to its long-term goal of 3.0 percent inflation.


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