Colombia’s central bank is maintaining its inflation outlook, warning consumer prices could accelerate in the coming months but are likely to slow in the second half of the year.
Jose Dario Uribe, the central bank chairman, said Friday inflation for 2011 could end below 3%, well within the bank’s target range of 2% to 4%. Colombia is suffering a recent spike in inflation, which Uribe said was the result of higher food prices due to devastating rains that crippled agricultural output.
“This weather phenomenon is not permanent,” Uribe said during a presentation on inflation and monetary policy. The inflationary impact of the rains is set to wane in the second half of the year, he added. The central bank chairman said inflation expectations by analysts and economists, which have increased in recent months, are assuming that “the temporary effects of the rains are permanent,” he added.
The central bank held its benchmark interest rate at 3% during its monetary policy meeting on Monday but hinted that it could start increasing rates if the economy grows at its expected pace or inflation spikes up.
(Darcy Crowe, Dow Jones)