Colombia wraps up week as 11th nation to raise rates
The Central Bank of Colombia (CBC) raised its benchmark interest rate by another 50 basis points to 3.0 percent and has now raised it 1.25 percentage points this year following rate hikes in September, October and Friday.
In its statement, the board said it decision was based on higher-than-expected inflation in November and rising inflation expectations, and significant economic growth in the fourth quarter of this year that is fueling a rise in the current account deficit.
The board reiterated its commitment to ensuring inflation returns to its target of 3.0 percent.
Colombia’s inflation rate has risen in the last seven months and rose to 5.26 percent in November from 4.58 percent in October, leading CBC to raise its estimate of inflation this year to an average of 5.3 percent and the forecast for 2022 to 3.7 percent.
Inflation expectations, even for the medium term, now top the bank’s target of 3.0 percent, CBC said.
“Leading indicators suggest that GDP continued on a significant growth trajectory in the fourth quarter, surpassing pre-pandemic levels,” the central bank said, confirming its forecast for gross domestic product growth this year of 9.8 percent.
Colombia’s economy expanded 13.2 percent year-on-year in the third quarter quarter of this year, down from 17.6 percent in the second quarter but in November the bank had raised its forecast for growth this year to 9.8 percent from September’s forecast of 8.6 percent.
Rising domestic demand is fueling imports, with Colombia’s imports rocketing an annual 64.9 percent in September, widening the trade deficit by US$2.2 billion in September, the largest gap since 1980.
This is boosting the country’s current account deficit, which rose to US$5.12 billion in the third quarter from $4.27 billion in the second quarter, and CBC raised its estimate for a deficit this year of 5.6 percent of GDP from October’s estimate of 5.3 percent.
“Banco de la República’s board of directors (BDBR) raises interest rates by 50 basis points
The board voted 4-3 to raise the benchmark interest rate by 50 basis points to 3.0%; three board members voted for a 75-basis point increase.
The decision was based on the following considerations:
- Annual inflation in November exceeded expectations, rising 68 basis points from October to 5.26%. Annual core inflation (CPI excluding food and regulated items) rose 52 basis points to 2.54%. These results led to a revision in the inflation forecast to 5.3% in 2021 and 3.7% in 2022.
- Leading indicators suggest that GDP continued on a significant growth trajectory in the fourth quarter, surpassing pre-pandemic levels. The technical staff reaffirmed its 2021 GDP growth projection at 9.8%.
- The current account deficit is expected to rise to 5.6% of GDP in 2021, largely explained by growth in domestic demand. The deficit would decrease to 4.9% of GDP in 2022 amid tighter international financial conditions.
- Inflation expectations rose above the 3% target, even in the medium term, implying a risk of indexation processes at higher inflation rates.
- The BDBR reiterated its commitment to ensuring that inflation converges to the 3% annual target.”
- www.CentralBankNews.info
Source: http://www.centralbanknews.info/2021/12/colombia-wraps-up-week-as-14th-nation.html
Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.
"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.
Please Help Support BeforeitsNews by trying our Natural Health Products below!
Order by Phone at 888-809-8385 or online at https://mitocopper.com M - F 9am to 5pm EST
Order by Phone at 866-388-7003 or online at https://www.herbanomic.com M - F 9am to 5pm EST
Order by Phone at 866-388-7003 or online at https://www.herbanomics.com M - F 9am to 5pm EST
Humic & Fulvic Trace Minerals Complex - Nature's most important supplement! Vivid Dreams again!
HNEX HydroNano EXtracellular Water - Improve immune system health and reduce inflammation.
Ultimate Clinical Potency Curcumin - Natural pain relief, reduce inflammation and so much more.
MitoCopper - Bioavailable Copper destroys pathogens and gives you more energy. (See Blood Video)
Oxy Powder - Natural Colon Cleanser! Cleans out toxic buildup with oxygen!
Nascent Iodine - Promotes detoxification, mental focus and thyroid health.
Smart Meter Cover - Reduces Smart Meter radiation by 96%! (See Video).