Colombia | BanRep holds monetary policy rate at 4.5% and awaits the impact of lower oil prices

During the last monetary policy meeting of the year, Colombia’s central bank board members decided unanimously to keep interest rates at 4.5%, as anticipated by BBVA Research. The decision was prompted by the global economic slowdown, deteriorating terms of trade that will reduce national income growth, a core inflation that remains below the central bank’s long term target, and well anchored inflation expectations. Furthermore, the central bank expressed a downward bias to its most likely GDP growth forecast for 2014 of 5.0% and that of 2016 of 4.3%. We expect the monetary pause to extend over 2015, but there is a risk of possible cuts in the first half of the year, depending on the impact of lower oil prices on local activity and inflation expectations.

Authors

Geographies

Topics