Obama, Lula
Reaffirm development of U.S.-Latin America
Ties
Colombia Fraud
Victims Get Just $96 Each
Colombia Bank Says Cut
Doesn’t Imply Similar Moves
Post Literate
Bolivia for Inclusion
Colombia Bank
Says Cut Doesn’t Imply Similar Moves
By Helen Murphy
Bogota - (Bloomberg) -- Colombian central
bank board members said they voted for a 1
percentage point interest rate reduction
last month without making any commitment to
making similar cuts in the future.
Policy makers cut Colombia’s overnight rate
at their Feb. 27 meeting to spur consumer
spending and revive a slumping economy,
according to the minutes of the meeting
posted on the bank’s Web site. Last month’s
cut pushed borrowing costs down to 8 percent
and followed half-point reductions in
December and January.
During last month’s meeting, policy makers
expressed concern that the economy was
slowing more than anticipated. The bank
pushed up borrowing costs to a seven-year
high in 2008, which helped check inflation
while at the same time undercutting consumer
lending, industrial output and retail sales.
“Economic activity continues to weaken
faster than the bank’s technical team
anticipated,” the minutes said. “The Board’s
members agreed, by consensus, to cut the
intervention rate at a faster pace than the
one adopted at previous meetings, but
without this implying similar cuts in the
future.”
Central bank Chief Jose Dario Uribe said
today that growth could slow to the “lower
end” of 1 percent to 3 percent, which
compares with a three-decade high of 7.5
percent reached in 2007.
The government is scheduled to report
fourth-quarter and annual economic growth
figures for last year on March 26. Inflation
could end the year below 5 percent, Uribe
said at a seminar in Bogota before the
minutes were released.
Before cutting rates in December, the bank’s
seven-member board increased lending rates
16 times over 2 1/2 years to curb the
fastest inflation in seven years. Inflation
slowed to an annual rate of 6.47 in
February, down from a peak of 7.94 percent
in October.
Industrial output fell 9.2 percent in
December from a year earlier, on the heels
of a 13 percent plunge in November, the
biggest drop since June 1999, when an
economic and banking crisis led the
government to nationalize several banks.
Policy makers also discussed the impact that
a weakened peso, which has depreciated 27
percent since July, would have on inflation.
“Monetary policy and peso devaluation will
help to support demand and future economic
growth to the extent that they do not
jeopardize the inflation targets,” the
minutes said. |
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