Banco de la Republica de Colombia keeps benchmark interest rate at 4˝%

By Caroline Salls

Pittsburgh, June 24 – The board of directors of the Banco de la Republica de Colombia decided to maintain its benchmark interest rate at 4˝%, according to a news release.

The board said recent data suggest a recovery in the growth of the United States after lower growth than expected in the first quarter.

In addition, the board said Japan and the euro zone are showing signs of gradual recovery, and China continues to slow down while the product of the main countries of Latin America is growing at low or negative rates.

The bank said it is feasible that the average economic growth of Colombia’s trading partners in 2015 will be less than in 2014.

Despite the recent recovery in prices of oil and the fall in the prices of imports, the board said the terms of Colombia’s trade in 2015 will be below the levels of last year and will permanently affect the dynamics of national income.

According to the release, the Colombian economy grew 2.8% in the first quarter, in line with the bank’s projections. Domestic demand slowed, but maintained a dynamic performance, with growth above 4%. In contrast, the board said net exports sapped growth by the sharp rise in imports.

For the second quarter of 2015, the board said information suggests that the Colombian economy is still adjusting to the new external conditions and that the expenditure of families could show moderate growth.

This process of adjustment is expected to continue as a result of the moderation in the growth of domestic spending, the effects of the fall in some international prices and the real depreciation of the peso.

The board said inflation dropped in May to 4.41%, lower than projected by the market average and the bank’s technical team.

The bank said the slowdown in inflation was explained by the slower pace of increase in food prices. The board said core inflation completed eight months of consecutive increases and stood at 3.99%.

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