Banco de la Republica de Colombia cuts benchmark interest rate to 7%

By Caroline Salls

Pittsburgh, March 24 – The board of directors of the Banco de la Republica de Colombia decided to reduce its benchmark interest rate by 25 basis points to 7%, according to a news release.

The board said annual inflation decreased in February for the seventh consecutive month and stood at 5.18%. The average of the measures of core inflation remained stable at 5.58%.

The bank said the effects of strong transitory supply shocks that diverted inflation off the target are still diluted as indicated by a slowdown in the consumer price index for food in February.

In Colombia, recent indicators of economic activity such as retail sales, industrial production and consumer confidence suggest a weakening of the economy in the first quarter, according to the release.

If this trend is accentuated, the board said its 2017 growth forecast could be reduced.

The board said its interest rate decision took into account more international uncertainty, the weakness of economic activity and the risk of an excessive deceleration.

In addition, the bank said the current level of the real interest rate policy is contractionary.

The decision to reduce the interest rate had the approval of four members of the board. One member voted to maintain a stable interest rate and another to reduce it by 50 basis points.

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