Colombia kept interest rates unchanged for a second straight month as policy makers judge that bond- buying plans by the U.S. Federal Reserve and European Central Bank will ease the risk of a global slump.
Banco de la Republica, led by bank Governor Jose Dario Uribe, held its benchmark interest rate at 4.75 percent today, in line with the forecasts of 28 of 33 analysts surveyed by Bloomberg. Five analysts forecast a quarter-point reduction.
The central bank lowered borrowing costs at its July and August meetings, citing weakening global growth that curbed demand for exports.
Policy makers will probably hold the rate now until the end of year, as efforts to stimulate the economy in the U.S. and Europe keep prices for Colombia’s oil, coal and gold exports high, said Julian Marquez, an analyst at Interbolsa SA, Colombia’s largest brokerage.
“If the ECB and the Fed are giving an additional boost to the global economy, that’s positive for Colombia and for commodities prices,” Marquez said in a telephone interview before today’s rate decision.
Earlier this month, bank chief Uribe said the ECB’s plan to stem Europe’s debt crisis, and a new round of stimulus by the Fed, both announced last month, have reduced the chances of a “collapse” in the world economy.
Global Demand, Peso
Industrial output fell 1.9 percent in August from a year earlier, its fourth year-on-year decline since March. Economists had forecast a 1.1 percent increase, according to the median estimate of 21 analysts surveyed by Bloomberg.
At the same time, exports have declined for three straight months on a year-on-year basis, while the trade deficit widened for a second month in August.
Colombian manufacturers have been battered by weak global growth and by the peso’s 6.7 percent rally against the dollar this year, the fifth-best performance among the 31 most-traded currencies tracked by Bloomberg worldwide.
At its September meeting, the central bank extended a $20 million daily dollar purchase program until March, from a previous end-date of November.
Consumer prices rose 0.29 percent in September, more than the 0.16 percent median forecast in a Bloomberg survey of 32 analysts.
Annual inflation slowed to 3.08 percent, close to the mid-point of the central bank’s target range. Colombia has the lowest inflation rate in Latin America after Chile among the region’s seven biggest economies. The central bank targets inflation of 3 percent, plus or minus one percentage point.
Expectations, Balance
Still, the central bank would be “more relaxed” if consumer credit growth slowed to an annual pace of 13-15 percent, from its current level of 20 percent, Marquez said. Economists raised their 2012 inflation forecast to 3.06 percent in a central bank survey published on Oct. 11, up from 3 percent in the September survey.
Gross domestic product grew 4.9 percent in the second quarter from a year earlier, the third-fastest expansion among Latin America’s seven biggest economies after Peru and Chile.
Central bank research shows that the Colombian economy can grow at a long- term pace of 4.3 percent to 5.3 percent without stoking inflation, Uribe said this month. Uribe was last month appointed for a third four-year term at the bank’s helm, starting January.
bloomberg.com
Banco de la Republica, led by bank Governor Jose Dario Uribe, held its benchmark interest rate at 4.75 percent today, in line with the forecasts of 28 of 33 analysts surveyed by Bloomberg. Five analysts forecast a quarter-point reduction.
The central bank lowered borrowing costs at its July and August meetings, citing weakening global growth that curbed demand for exports.
Policy makers will probably hold the rate now until the end of year, as efforts to stimulate the economy in the U.S. and Europe keep prices for Colombia’s oil, coal and gold exports high, said Julian Marquez, an analyst at Interbolsa SA, Colombia’s largest brokerage.
“If the ECB and the Fed are giving an additional boost to the global economy, that’s positive for Colombia and for commodities prices,” Marquez said in a telephone interview before today’s rate decision.
Earlier this month, bank chief Uribe said the ECB’s plan to stem Europe’s debt crisis, and a new round of stimulus by the Fed, both announced last month, have reduced the chances of a “collapse” in the world economy.
Global Demand, Peso
Industrial output fell 1.9 percent in August from a year earlier, its fourth year-on-year decline since March. Economists had forecast a 1.1 percent increase, according to the median estimate of 21 analysts surveyed by Bloomberg.
At the same time, exports have declined for three straight months on a year-on-year basis, while the trade deficit widened for a second month in August.
Colombian manufacturers have been battered by weak global growth and by the peso’s 6.7 percent rally against the dollar this year, the fifth-best performance among the 31 most-traded currencies tracked by Bloomberg worldwide.
At its September meeting, the central bank extended a $20 million daily dollar purchase program until March, from a previous end-date of November.
Consumer prices rose 0.29 percent in September, more than the 0.16 percent median forecast in a Bloomberg survey of 32 analysts.
Annual inflation slowed to 3.08 percent, close to the mid-point of the central bank’s target range. Colombia has the lowest inflation rate in Latin America after Chile among the region’s seven biggest economies. The central bank targets inflation of 3 percent, plus or minus one percentage point.
Expectations, Balance
Still, the central bank would be “more relaxed” if consumer credit growth slowed to an annual pace of 13-15 percent, from its current level of 20 percent, Marquez said. Economists raised their 2012 inflation forecast to 3.06 percent in a central bank survey published on Oct. 11, up from 3 percent in the September survey.
Gross domestic product grew 4.9 percent in the second quarter from a year earlier, the third-fastest expansion among Latin America’s seven biggest economies after Peru and Chile.
Central bank research shows that the Colombian economy can grow at a long- term pace of 4.3 percent to 5.3 percent without stoking inflation, Uribe said this month. Uribe was last month appointed for a third four-year term at the bank’s helm, starting January.
bloomberg.com
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