Friday, January 29, 2021

Colombia holds rate 4th time, still sees rising inflation

    Colombia's central bank held its benchmark interest rate steady for the fourth time and confirmed its view in recent months that economic activity is continuing to recover and inflation is expected to accelerate after remaining low in the first quarter.
     The Central Bank of Colombia (CBC) left its policy rate at 1.75 percent, unchanged since September last year when it finished easing after cutting the rate seven times by a total of 250 basis points.
     The decision was widely expected by financial markets and the bank's board decided by a majority of 5 to 2 to maintain the rate, as in December when 2 members voted to cut the rate.
    "The most recent economic growth indicators confirm the recovery of activity and this evolution is expected to continue throughout the year," the bank said, adding the financial system continues to remain favorable and loan portfolios and interest rates continue to respond to monetary stimulus.
    Colombia's inflation rate rose slightly to 1.61 percent in December from a low of 1.49 percent in November, well below CBC's target of 3.0 percent, and inflation expectations were stable at 2.7 percent for the end of 2021 and 3.1 percent by end-2022.
    "The projection of the trajectory of inflation for 2021 foresees low levels during the first quarter and a subsequent acceleration during the rest of the year," CBC said.



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