facebook
linkedin
twitter
About Us
  • Economy
  • Banking
  • Securities
  • Insurance
  • Commodities
  • Public Sector
  • Tourism
  • Startup
  • Real Estate
  • Retail
  • Law & Justice
  • Events
mauricio cardenas colombia finance minister tax reform ecopetrol

Colombia Raises Benchmark Interest Rate for 10th Straight Month to Fight Inflation

by Jared Wade
June 23, 2016
Comment: Off

To fight the highest inflation Colombia has seen in 15 years, the nation’s central bank raised its benchmark interest rate, up 25 basis points to 7.5%, for the tenth consecutive month. After the June 22 move, Finance Minister Mauricio Cárdenas suggested this may be the final increase, however, as the monetary policy adjustments made thus far will counteract spiking consumer prices.

“I think the job is done,” said Cárdenas, according to Bloomberg. “Interest rates have reached a fair, suitable level — a level that allows for an ordered adjustment in the economy, including slower inflation.”

Though inflation his 8.2% in May, Colombia’s central bank, Banco de la República, noted that the average of core inflation indicators fell to 6.3%. “Analysts’ inflation expectations to one and two years posted at 4.4% and 3.7%, respectively,” said the bank in a statement.

In addition to the underlying economic fundamentals, the bank believes the adjustments made to the interest rate can reign in inflation back to the government’s target band of 2%–4% in 2017. Falling oil prices, the subsequent peso devaluation, and a difficult El Niño season were credited as the top reasons for inflation climbing so high..

“The Colombian economy continues adjusting in an orderly manner to the strong shocks recorded since 2014,” said the bank. “The current account deficit is correcting gradually, and the risk of an excessive deceleration of domestic demand remains moderate. Inflation has accelerated because of the depreciation of the peso, El Niño, and by the activation of some indexation mechanisms.”

In addition, Banco de la República highlighted that Colombia’s current account deficit in the first quarter of 2016 was $3.38 billion USD, or 5.6% of GDP. This was below the projected sum.

The bank also maintained its previous GDP prediction for 2016. It continues to forecast economic growth between 1.5% and 3.2%, calling 2.5% “the most likely figure.”

 

(Photo: Colombian Finance Minister Mauricio Cárdenas speaks at a recent World Economic Forum event in Medellín. Credit: World Economic Forum / Benedikt von Loebell)

DON'T MISS OUT: The only English-language Colombia news that's strictly business, markets, & investment!
Join global executives & investors by subscribing to our FREE weekly updates
I agree to have my personal information transfered to MailChimp ( more information )
We will never spam you or share your email address ¡Nunca Jamás!
Share on FacebookShare on TwitterShare on Google+
Send to Kindle

Comments

comments

About the Author
Jared Wade is editor in chief of Finance Colombia. He is a Bogotá-based journalist with 15 years of experience covering topics including business, financial services, Latin America, and sports. Email him at jared.wade(at) financecolombia.com or follow him on Twitter at @Jared_Wade.
  • google-share

Related Posts

JUAN JOSE ECHAVARRIA central bank colombia banco de la republica interest rate inflation
off

Colombian Central Bank Holds Auction to Accumulate International Reserves

Posted On December 3, 2018
, By Jared Wade
Colombian peso Colombia peso Colombia inflation (Credit: Jared Wade)
off

Colombian Central Bank Sticks to 3% Inflation Target Rate

Posted On December 2, 2018
, By Jared Wade
colombia inflation rate peso 50 mil banco de la republica central bank Colombian peso Colombia peso Colombia inflation Colombia minimum wage colombian peso
off

Inflation in Colombia Jumped to 3.33% in October, the Highest Level Since February

Posted On November 3, 2018
, By Jared Wade
Colombian Peso Exchange Rate



RECENT

POPULAR

COMMENTS

Cabify Secures $70 Million USD Loan from IDB Invest

Posted On February 8, 2019
Justin Trudeau in Canada (Photo credit: Adam Scotti / PMO)

Canada Pledges $40 Million USD in Aid for Venezuelans

Posted On February 5, 2019

Colombian President Duque Calls on Maduro to Step Down, Recognizes Opposition Head as Venezuela's Legitimate Leader

Posted On January 23, 2019
AV MRO (Photo credit: Avianca)

Avianca Transported more than 30.5 Million Passengers in 2018

Posted On January 23, 2019

Colombia-Based Tecnoglass Announces Joint Venture with Saint-Gobain, New Glass Factory

Posted On January 11, 2019
Homicide Crime Photo Courtesy Geralt Pixabay

Colombia's Homicide Rate Reaches 30 Year Low In 2014

Posted On January 5, 2015

Colombia Raises Monthly Minimum Wage To $644,350 (US $270 as of Jan.20) For 2015

Posted On January 20, 2015
Cartagena Shoreline - Photo Credit: Loren Moss ©2013

Cartagena Is New JetBlue Destination From Fort Lauderdale

Posted On January 1, 2015

Hilton Worldwide Launches Colombia's First Hilton Garden Inn, Barranquilla, Atlántico

Posted On January 7, 2015

Understanding Petroleum Production Acronyms, Phrases & Abbreviations

Posted On January 24, 2015

[…] Con el aumento, el el nuevo...

Posted On December 31, 2017

[…] Cardinal Compañía de Seguro...

Posted On March 30, 2017

[…] 2015, Hilton added a $210...

Posted On July 6, 2016

[…] company begin preparing to be...

Posted On July 2, 2016

[…] international airport...

Posted On June 18, 2016

Don’t Miss Out! Subscribe Now:

Watch This!

CONSIDER ADVERTISING WITH US



Newsletter

Contact Us

  1. Name *
    * Please enter your name
  2. Email *
    * Please enter a valid email address
  3. Message *
    * Please enter message
Copyright 2014-2018 Finance Colombia All Rights Reserved.