Colombia’s central bank will probably keep its benchmark interest rate unchanged as the threat of inflation outweighs concern that a plunge in trade with Venezuela will hobble the economy’s recovery.
The seven-member board, led by bank chief Jose Dario Uribe, will keep the interbank rate at 3.5 percent at its meeting today, according to all 25 economists surveyed by Bloomberg.
The central bank kept borrowing costs at a record low at its last meeting in a bid to offset reduced exports to Venezuela, traditionally Colombia’s second-biggest trading partner, by stimulating consumer demand and credit. Concern that inflation may rebound has kept policy makers from making additional cuts, according to IDEAglobal’s Alvise Marino.
“Even though the economy could actually use a rate cut, the inflation outlook is now more uncertain,” said Marino, an emerging markets economist for the New York-based research company. “That’s a factor for playing on the safe side.”
The annual inflation rate may almost double by year-end from last year, according to a central bank survey.
(Helen Murphy, Alexander Cuadros, Bloomberg)