Banco de la Republica de Colombia’s board ups benchmark rate to 4˝%

By Caroline Salls

Pittsburgh, Aug. 29 – The board of directors of the Banco de la Republica de Colombia decided to increase its benchmark interest rate by 25 basis points to 4˝%, according to a news release.

The board said the Colombian economy is estimated to grow about 5% in 2014, driven by strong domestic demand. Also, the board said the unemployment rate continues to drop in a context of strong growth in wage employment.

The bank said economic growth in Colombia's trading partners was lower than expected in the first half of the year, but more dynamic external demand is expected in the coming quarters, supported in particular by the economic recovery in the United States.

In July annual consumer inflation rose 10 bps to stand at 2.89%, the board said. In contrast, the average of the four core inflation indicators monitored by the bank declined for the second consecutive month and was 2.58%. December inflation forecasts and future expectations are about 3%.

According to the release, annual growth of bank credit has declined in the last two months despite the fact that increases in the transmission of the benchmark interest rate to lending and deposit rates has been low.

The board said the economy is adjusting to the change in stance of monetary policy that began in March. The bank hopes the increased interest rate will keep inflation expectations close to the target of 3% and economic activity at its potential level.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.