Central Bank of the Republic of Colombia Lifts Key Interest Rate for a Second Time

May 31, 2014

April’s first Colombian central bank interest rate hike in 26 months has been followed by a second 25-basis point increase in May, taking the key rate to 3.75%.  Before these back-to-back increases, the previous rate hike had occurred in February 2012, a move that culminated a streak of nine tightenings totaling 225 basis points.  In between, seven cuts from July 2012 to March 2013 had cumulated to 200 basis points from 5.25% to 3.25%.  The rate now moves up to 3.75%.  This second tightening of monetary policy was justified both by relatively buoyant economic growth even for Latin America and an upward drift of CPI inflation to 2.7% as of April.  Such is likely to exceed the 2-4% target midpoint by the May inflation report.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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