Friday, December 20, 2013

Colombia holds rate, world economy better than expected

    Colombia's central bank held its benchmark interest rate steady at 3.25 percent, as expected, saying it would carefully monitor economic activity and inflation along with asset markets and the international situation while interest rates "remain at levels that stimulate aggregate spending in the economy."
    The Central Bank of Colombia, which has held rates steady since April after cutting by 100 basis points in the first quarter of the year, said the world economy was recovering slowly but better than expected, with U.S. economy growing at a modest rate while the euro area is likely to grow again and the big emerging economies of Asia and Latin America grow unevenly.
    The central bank briefly referred to the U.S. Federal Reserve's decision to buy less financial assets beginning in January, but it did not make any comments on how this could affect Colombia.
    Colombia's peso has depreciated this year, especially in May, along with other emerging market currencies but largely shrugged off the Fed's decision this week to start tapering. For the year, the peso has lost 8.6 percent against the U.S. dollar, trading at 1,934 to the dollar today.
    Seperately, Jose Dario Uribe, central bank president, told a press conference the bank would continue to intervene in foreign exchange markets, buying up to $1 billion in the first quarter and that he would like to see the peso weaken further.
    Colombia's economy expanded by more than expected in the third quarter, mainly due to growth in construction while public spending also accelerated and household consumption grew.
    Prior to the release of data this week that showed Colombia's Gross Domestic Product grew by an annual 5.1 percent in the third quarter, up from 3.9 percent in the second quarter, financial markets had taken note of the central bank's minutes from November that raised the possibility of a "monetary boost" if the economy didn't improve as inflation had declined.
    But the strong third quarter ended any talk of a rate cut and the central bank said indicators for consumer confidence, economic expectations, retail and auto sales suggest that household consumption will grow in the fourth quarter despite a 0.1 percent decline in coffee processing in October. Growth in total credit slowed in November, but is still higher than the rise in nominal GDP.
    Based on data so far, the central bank said it was maintaining its estimate for 2013 growth of 3.5-4.5 percent, with 4.1 percent the more likely figure. The government's goal is 4.5 percent growth.
    "This means that economic growth in the second half will be considerably higher than that observed in the first," the central bank said. In its quarterly report from November, the central bank forecast 2013 growth of 4.0 percent, the same as 2012's 4.0 percent.
    Colombia's inflation rate fell to a lower-than-expected 1.76 percent in November from 1.84 percent in October while average core inflation was stable at 2.46 percent, the bank said.
    Inflation expectations were relatively stable and below 3.0 percent, the bank said. The bank targets inflation of 3.0 percent, plus/minus one percentage point.

    www.CentralBankNews.info
 
 
 

0 comments:

Post a Comment