Friday, June 17, 2011

Colombia Central Bank Lifts Interest Rate 25bps to 4.25%

The Central Bank of Colombia increased its benchmark monetary policy interest rate by 25 basis points to 4.25% from 4.00% previously.  The Bank said (translated): "Credit growth continued to accelerate. Both business and household lending real growth rates are tracking significantly higher than GDP growth. This situation occurs in a context where much of real interest rates are at historically low levels." and that "The increase in the rate of intervention aims to maintain inflation within the target range this year and next and help prevent future financial imbalances."

Previously the Central Bank of Colombia also increased its interest rate by 25 basis points to 4.00% at its May meeting this year.  Colombia reported annual inflation of 3.02% in May, compared to 2.84% in April, and 3.19% in March, this compares to the Bank's inflation target of 3%.  Goldman Sachs is forecasting 2011 GDP growth at 5.5%, while Morgan Stanley is forecasting 4.9% growth for the Colombian economy.


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