The seven member board of Colombia’s Central Bank decided to raise the benchmark interest rate by 25 basis points, or 0.25%, to 4% on Monday morning, according to a Central Bank press release.
The board, headed by Central Bank President Jose Dario Uribe, said that the aim of the interest rate increase was to keep inflation within the target range of between 2% and 4% and help prevent future financial instability.
The board also said that consumer inflation fell in April and stood at 2.84%, while the average measure of basic inflation remains below 3%.
There are apparently consistent indications that economic activity remains dynamic, with predicted economic growth for the first trimester and for 2011 remaining unchanged as credit continues to accelerate.
These reasons led the board to conclude that the adjustments towards a less expansive monetary policy should continue and added that the interest rate decided by the central bank will continue to support GDP and employment.
The board also decided to extend the policy of purchasing $20 million a day until at least September 30, 2011.
The increase in interest rate and the extension of the dollar-buying policy were both predicted by economists surveyed by Bloomberg.