Colombian Key Interest Rate Reduced to 6% from 7%

April 30, 2009

The Central Bank of the Republic of Colombia implemented its fifth rate cut since December, bringing the cumulative decline to 400 basis points.  Colombian GDP fell 4.1% saar in 4Q08 and probably met the layman’s condition for recession by contracting again last quarter.  At 6.0%, the central bank interest rate is roughly on a par with on-year CPI inflation now.  Like several other Latin American currencies, the peso has declined sharply over the past year, dropping about 24% against the dollar.  Two other central banks — those in Brazil and South Africa — also cut their key interest rates by 100 basis points this week, while those in Malaysia and New Zealand implemented 50-bp reductions.  Policy meetings this week in the United States, Israel, Poland, Vietnam, and Japan resulted in no further lowering of key central bank rates.  The size of Colombia’s easing did not surprise markets.

Copyright 2009 Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.


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