Friday, December 21, 2018

Colombia holds rate, staff still sees 2018 growth at 2.6%

     Colombia's central bank left its benchmark interest rate steady at 4.25 percent, as expected, with the bank's staff maintaining its forecast for 2018 economic growth at 2,.6 percent as the under-utilization of output capacity persists.
     The Central Bank of Colombia (CBC), which has maintained its rate since April, added today's unanimous decision by its board took into account the uncertainty of a recovery of weak economic activity, inflation that is expected to converge to the 3.0 percent target, and the impact on Colombia's economy from changing external conditions.
     In November Colombia's inflation rate eased to 3.27 percent from 3.33 percent in October while there were only slight changes to inflation expectations that around above 3.0 percent.
     Inflation expectations of more than 1 year are around 3.4 percent while those embedded in movement debt are close to 3.8 percent, CBC said.
     Domestic demand in the third quarter was better than expected, mainly driven by higher construction output, and CBC said data for the fourth quarter suggest output will by higher than in the third quarter when gross domestic product grew by 0.2 percent from the second quarter for year-on-year growth of 2.7 percent.
     The board's policy decision was largely expected with a Reuters poll from last week showing that CBC is expected to maintain its rate at least until March next year when it will start raising its rate to contain inflationary pressures and align with international monetary policy trends.
     The poll also showed that expectations for growth this year fell to 2.63 percent from a previous 2.7 percent and were steady for next year at 3.3 percent.



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