The Colombian central bank’s decision to raise interest rates last month for the sixth consecutive policy meeting was aimed at keeping inflation risks low and reining in a fast-growing economy, minutes from the meeting show.
At its July 29 meeting, the bank’s seven-member board agreed to increase its benchmark rate by 25 basis points to 4.5%.
The minutes from the meeting, released Friday, showed the board is concerned over “credit growth that continues accelerating.” It said second-quarter growth is likely to be similar to the 5.1% growth rate for the first quarter that was driven largely by heavy consumer spending.
The minutes also showed one board member again voted against a rate increase, arguing inflation is well-anchored and higher interest rates could attract more foreign capital which could work against the steady economic growth rates the bank is shooting for. The member, who wasn’t named, also said that the United States, Colombia’s main trading partner, is unlikely to start raising interest rates anytime before 2013.
Analysts have been betting the bank could raise rates again when the board meets later this month, although some have retreated somewhat from this assumption following the recent shakeup in global financial markets.
Regarding any future policy actions, the minutes said the board’s monetary policy will “depend on new information available.”
The board added that it will “continue to carefully monitor the international situation, especially the risk associated with managing debt problems in several advanced economies.”
Colombia’s economy is likely to grow as much as 6.5% this year, the bank has said, while 12-month inflation through July stands at 3.4%, which is inside the bank’s 2% to 4% target inflation range for 2011.