BOGOTA (Reuters) - Colombia’s central bank unanimously held its benchmark interest rate at 4.25% yet again at its meeting on Friday, a rate the bank chief said could remain in place for a “relatively long period” as inflation and growth risks diminish.
The following is a Reuters translation of the statement accompanying the bank’s decision:
“In this decision, the board mainly considered the following information:
In November, annual inflation (3.84%) decreased slightly. Supply shocks that have affected inflation are expected to begin to subside and in early 2020 inflation will resume its convergence to the target, as reflected in market expectations. Basic inflation measures are close to 3%.
With new information regarding economic activity, the bank’s technical team maintained the projection of economic growth for 2019 at 3.2%.
The outlook for global growth remains moderate and in the United States the Federal Reserve kept its interest rate constant.
The projection of the current account deficit for 2019 continues to exceed 4% of gross domestic product and continues to be financed mainly by foreign direct investment.
Based on this information, the board considered the following factors in its decision:
Transitory deviations of inflation with respect to the target, uncertainty about the persistence of the depreciation of the peso and its degree of transfer to domestic prices.
The size of excess productive capacity and the speed with which they are reduced.
The effects on the Colombian economy derived from changing external conditions.
In this environment, when evaluating the state of the economy and the balance of risks, the board unanimously decided to maintain the reference interest rate at 4.25%.
The board will continue to carefully monitor the behavior of inflation and projections of economic activity, as well as the evolution of the current account and the international situation.
Finally, the board reiterates that monetary policy will depend on the new information available.”
Compiled by Oliver Griffin