Colombia’s Central Bank on Friday announced that it has cut interest rates to 3.75%, making it the lowest of all Latin American countries by a comfortable margin.
“The decision was made after taking into account that the Colombian economy is growing below its potential, and because observed and projected inflation is comfortably below the goal of 3%, with no upward pressure expected in the near future,” the bank announced.
The bank contributed the low inflation rate in part to tax reform measures, which resulted in a fall in the prices of various consumer goods, and was in turn reflected in the consumer price index from which the inflation rate is derived from.
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The move comes after Colombian President Juan Manuel Santos urged the central bank to lower interests in order to halt the country’s economic slowdown. The country’s finance minister, Mauricio Cardenas, echoed the president’s statements claiming conditions “were ripe” for another reduction.
MORE: Santos urges central bank to lower interest rates to halt economic slowdown
The reduction does not come as a surprise to analysts, who had predicted the move due to a combination of a downturn in the economy and low inflation rates.
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