The Colombian central bank’s board on Friday decided to keep its policy
interest rate unchanged at 4.5%, a move widely expected by the market.
The consensus was for no rate cut, according to a Dow Jones
Newswires survey of 11 analysts. Just two economists expected the
monetary authority to cut its key rate.
Two months ago, the central bank’s board said it would likely keep
its rate unchanged at 4.5% as that level would allow the economy to
recover. The central bank has cut rates by 5.5 percentage points since
December 2008.
The rate hasn’t been that low since February 1998, when the bank
began using interest rates as its main tool to control inflation.
The decision comes in spite of dismal economic data.
Retail sales contracted 4.5% year-on-year in June, while industrial production shrank 6.6% in June.
After two years of tightening monetary policy, the bank made a
U-turn in December as the country’s woes shifted from rising inflation
to a slumping economy.
The rate applies to repurchase agreements, through which the monetary authority provides liquidity to the financial system. (Dow Jones)