Interest Rate in Colombia
Colombia - Interest Rate
Central Bank holds the rate stable in March meeting
At its Board of Directors meeting held on 22 March, Colombia’s Central Bank (Banco de la República, BanRep) kept the benchmark interest rate at 4.25%, where it has been since 27 April 2018, when the Bank cut the rate by 25 basis points. The Bank’s latest decision was unanimous and in line with market expectations.
The Bank kept the rate stable against the backdrop of falling inflation, declining price expectations and healthy economic activity. Inflation dropped to an over four-year low of 3.0% in February (January: 3.2%), nearing the midpoint of the Bank’s 2.0%–4.0% target band, as the peso gained ground and amid reduced price pressures. Stronger domestic demand fueled a marked upturn in growth in 2018. The momentum should have carried over into this year and further reduce spare capacity, supported by an improved export performance and robust domestic demand dynamics.
The Bank’s accompanying statement signaled that it would maintain the current stance, offering little forward guidance beyond reiterating that the trajectory of inflation will be closely monitored in the context of global developments, including the evolution of oil prices, the Federal Reserve’s policy reversal and global trade tensions. While BanRep’s Governor, Juan José Echavarría, hinted at the Bank keeping the rate stable all year in a post-meeting press conference, the majority of panelists expect a rate hike by year-end as price pressures start to pick up.
Commenting on the meeting in the context of latest developments, JP Morgan economists noted:
“Notwithstanding the serenity of BanRep’s board, we keep our call for policy to move toward a more neutral stance starting in 4Q, taking the policy rate up 75bp to 5% by December. This call rests on: the constructive tone for growth, led by domestic demand; inflation which we expect to drift higher in 2H; the widening current account deficit; and lingering fiscal concerns, with the Fiscal Rule Committee considering some extra deficit space. We think these factors warrant a policy rate in neutral territory even if the Fed and global liquidity concerns are on the backburner.”
The next monetary policy meeting will be held on 26 April.
LatinFocus Consensus Forecast panelists expect the policy rate to end 2019 at 4.78% and 2020 at 4.98%.
Colombia - Interest Rate Data
|Policy Interest Rate (%)||3.25||4.50||5.75||7.50||4.75|
5 years of economic forecasts for more than 30 economic indicators.
Colombia Interest Rate Chart
Source: Colombia Central Bank.
|Bond Yield||6.35||0.0 %||Apr 12|
|Exchange Rate||3,116||-0.17 %||Apr 12|
|Stock Market||13,130||-0.66 %||Apr 12|
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April 17, 2019
The Fedesarrollo consumer confidence index rebounded after remaining in negative territory for six consecutive months; it rose to 1.2 points in March from minus 5.6 points in February.
April 12, 2019
According to data released by Colombia’s National Administrative Department of Statistics (DANE) on 12 April, the industrial sector grew 2.8% over the same month of last year in February.
April 5, 2019
According to the National Department of Administrative Statistics (DANE), consumer prices increased 0.43% over the previous month in March, a slightly softer upturn compared to February’s 0.57% month-on-month rise.
April 4, 2019
According to the National Department of Administrative Statistics (DANE), exports returned to growth in February, growing 6.2% over the same month of the previous year.
April 1, 2019
Colombia’s manufacturing sector contracted more sharply in March, reflected by a drop in the seasonally-adjusted Davivienda manufacturing Purchasing Managers Index (PMI) from 49.5 in February to 48.9 in March.