The board of Colombia’s central bank left the benchmark interest rate unchanged at 4.5% after a meeting Friday, according to a central bank communique.
The board, headed by Jose Dario Uribe, felt it wise to maintain the interest rate at its current level especially given the high uncertainty in international financial markets and its potential negative effect on the growth of the world economy and in particular that of Colombia.
The board also said their decision took into account factors such as inflation and consumer and business confidence. Inflation in July rose for the third consecutive month (3.42%) especially the with the price of food. The average measure of basic inflation increased again and was above the mid-point of the target range of one percentage point above or below 3%. Expectations about inflation over different time periods and inflation projections for the end of 2011 and 2012 are within the target range.
According to the board, economic indicators confirm that the Colombian economy is experiencing a good rate of growth impulsed by household consumption. Indicators of consumer and industry confidence continue at high levels and the growth of credit to families and businesses continues to increase with real interest rates at historic lows.