Colombian Finance Minister Oscar
Ivan Zuluaga said the central bank should continue to cut
lending rates and monetary policy be more expansionist to help
stimulate economic growth.
“What I am sure is that we have to continue to reduce the
interest rate,” Zuluaga said in an interview with Bloomberg
Television in Bogota. “The important issue is the trend of
monetary policy, I am convinced it has to be more expansionary,
we need to be more flexible to reduce the interest rate in order
to stimulate the economy in general.”
The central bank’s seven-member board on Dec. 19
unanimously voted to lower the benchmark interest rate by half a
percentage point to 9.5 percent, the first reduction in three
years, after falling industrial output and retail sales pointed
to slowing economic growth.
Last month’s rate reduction followed 16 increases since
mid-2006 as policy makers fought to bring annual inflation down
from a seven-year high of 7.94 percent reached in October and
above the bank’s target range of 3.5 percent to 4.5 percent.
By raising lending rates last year to their highest since
2001, the bank helped to rein in consumer spending and prices,
while also slowing the economy from 7.9 percent growth in 2007.
The bank’s board, led by Jose Dario Uribe, meets again on
Colombia’s economy will grow between 1 percent and 3
percent this year with inflation slowing to 5 percent, the
bank’s Uribe said today in Paris.
The global economic crisis will result in lower economic
growth, said Zuluaga. The government may revise growth forecasts
lower depending on full-year data for 2008 and the first months
of this year, he said.
“We have to preserve the macroeconomic conditions to
overcome the external crisis, which is seriously effecting the
world economy,” said Zuluaga. “That’s our commitment, to work
together to make the right decisions to preserve the Colombian
Industrial output contracted more than 13 percent in
November from a year ago, the lowest reading since June 1999,
when an economic and banking crisis in Colombia shuttered
lenders and led the government to nationalize several banks.
In a bid to boost economic growth, the South American
country plans to invest 55 trillion pesos ($24 billion) on
“We are trying to prevent the nation from falling into
recession so the public investment plan is fundamental to
boosting employment and economic growth,” said Zuluaga. (Bloomberg)