Colombian Central Bank Lops Another 100 Basis Points Off Key Lending Rate

May 29, 2009

The Bank of the Republic reduced the key interbank lending rate to an 11-year low of 5% from 6%, meeting the consensus of a slight majority of analysts.  Such is the third straight full percentage point drop following ones on April 30 and March 20th.  Cuts of 50 bps were implemented earlier on February 2nd and December 19th.  At 5%, the central bank’s rate is now lower than on-year CPI inflation of 5.7%, but that rate has fallen from 7.7% in December.  Colombia has not escaped the global recession.  It is expected to have experienced a second consecutive quarter of negative GDP growth in 1Q09, and unemployment exceeds 10%.  Colombia’s current account deficit runs at about 4% of GDP, and the peso has lost roughly 19% against the dollar from its value a year ago.

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


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