Colombia’s growth not pressuring inflation

Colombia’s central bank said the economy’s faster-than-expected expansion isn’t generating inflationary pressure, according to the minutes of the June 18 policy meeting.

The seven-member board analyzed economic growth and inflationary expectations through next year as well as the European financial crisis before voting to keep the benchmark interest rate at 3%.

“The increase in exports, fueled by the recovery in global economic momentum and better terms of trade, confirms the build- up in the Colombian economy, as do other factors such as the increase in consumer and producer confidence, the increase in a number of leading indicators, and the soundness of the financial system,” the bank said in minutes posted on its website today.

The board, led by bank chief Jose Dario Uribe, noted that while annual inflation in May was above April’s level it was below the forecasts of the market and the bank. Colombia’s annual inflation rate was 2.07% in May, near the bottom of the central bank’s 2$% to 4% target range. The June inflation report is scheduled to be released tomorrow.

South America’s fourth-biggest economy emerged from its first recession in a decade in the fourth quarter. In the first quarter of 2010, gross domestic product expanded 4.4% from the same period a year earlier. The government forecasts GDP will grow 3% this year.

(Helen Murphy, Bloomberg)

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