Monetary Policy on Hold in Colombia

May 29, 2012

The Central Bank of the Republic of Colombia’s overnight lending rate was left at 5.25% on Monday.  This was the third straight monthly meeting to have produced such a result, and the vote by policymakers was unanimous.  From a floor of 3.0%, they had previously raised the rate in 25-basis point increments seven times in 2011 and in January and February of this year.  Monetary authorities are worried about the severity of Europe’s recession and are reasonably confident that Colombian inflation will not exceed the 2-4% target range.  Real GDP expanded by a robust 6.1% between the final quarters of 2010 and 2011, but the jobless rate exceeds 10.0%.  Consumer prices climbed 3.4% in the year to April, a tenth percentage point less than in January.  Despite a current account deficit around 2% of GDP, the peso has appreciated against the U.S. currency so far this year.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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