Central Bank of the Republic of Colombia Kept 4.5% Main Interest Rate

March 23, 2015

Late last Friday, as it had done at the six previous monetary policy meetings, the Board of Directors left its interest rate benchmark at 4.5%.  The rate had previously been raised by 25 basis points at each of five straight meetings between April 2014 and August 2014.  On-year CPI inflation of 4.36% exceeded target and expectations in February.  But growth has slowed and is projected to be less than 4% this year, so officials anticipated a downward convergence of inflation on target within the policy horizon.  The statement released on March 20 also notes that core inflation of 3.53% is below headline CPI and that medium-term inflation expectations are close to 3%.  Peso depreciation helps to loosen monetary conditions and reflects Colombia’s current account deficit as well as general dollar strength and lower oil prices.  The statement declared the 4.5% interest rate level still appropriate.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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