Colombia’s Fourth Consecutive Central Bank Interest Rate Hike

May 30, 2011

The Central Bank of the Republic of Colombia intervention rate was increased by another 25 basis points, matching prior moves in February, March and April.  The rate, which now becomes 4.0%, had been at 3.0% until February 25 following eight reductions totaling 700 basis points between December 2008 and April 2010.  Inflation is now running at 2.8% versus a 2-4% target range.  However, growth of some 5% this year is faster than anticipated, which means that the output gap is closing more quickly.  Although expected inflation is contained, such could face upward pressure.  Today‚Äôs statement from monetary officials serves notice that more rate increases are probable in coming months.

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.



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