BOGOTA (Reuters) - Colombia’s central bank unanimously held its benchmark interest rate steady at 4.25% yet again at a meeting on Friday, adding that it expects inflation to fall closer to the 3% target by the end of the year.
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 December, annual inflation (3.8%) decreased slightly. Supply shocks that have affected inflation are expected to continue diluting and inflation will resume its convergence to the target, as reflected in market expectations. Basic inflation measures are close to 3%.
“With new information on economic activity, the bank’s technical team maintained its estimate of economic growth for 2019 at 3.2% and for 2020 at 3.3%.
“The outlook for global growth is moderate and in the United States the Federal Reserve kept its interest rate constant.
“The projection of the current account deficit for 2019 remains above 4% of gross domestic product and continues to be financed mostly by foreign direct investment.
“Based on this information, the board considered the following factors in its decision:
“The transitory deviations of inflation with respect to the target, uncertainty over the persistent depreciation of the peso and the degree that transfers to domestic prices.
“The size of excess production capacity and the speed with which it is reduced.
“The effects of changing external conditions on the Colombian economy.
“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 forecasts for economic activity, as well as the evolution of the current account and the international situation, in particular the economic effects of the recent international health emergency declaration. Finally, the board reiterates that monetary policy will continue to depend on the available information.”
Compiled by Oliver Griffin in Bogota; Editing by Matthew Lewis