The Colombian central bank maintained the nation’s key interest rate at 4.25% yesterday at its monthly meeting, citing steady inflation figures and expectations for encouraging economic growth in the third quarter.
The year-over-year inflation rate in August came in at 3.1%, the lowest figure in years and just a tick above the midpoint within Banco de la República’s target range of 2%-4%. This marked the sixth straight month that annual inflation was below 3.2%.
The central bank’s analysts expect a slight rise in the next three months, but they still expect inflation to conclude the year at 3.2%. This will remain relatively stable through the end of next year, landing at 3.3% in December 2019, per analyst projections.
In terms of growth, “the economic activity indicators available for the third quarter suggest that the economy would have continued growing slowly, albeit somewhat faster than in the first half of the year,” said the bank in a statement.
Banco de la República has continued forecast the Colombian gross domestic product (GDP) to grow by 2.7% for 2018.
“The average growth of the country’s trading partners remains dynamic, driven mainly by the developed economies,” stated Banco de la República. “The international price of oil and the terms of trade continued to increase and continue driving the national income.”
The central bank cut Colombia’s benchmark interest rate by 25 basis points to 4.25% at its April meeting. It has since held the rate steady over the subsequent five months.