{"id":91800,"date":"2016-06-22T20:06:15","date_gmt":"2016-06-23T00:06:15","guid":{"rendered":"http:\/\/countingpips.com\/?p=91800"},"modified":"2016-06-22T20:06:15","modified_gmt":"2016-06-23T00:06:15","slug":"colombia-raises-rate-10th-month-in-a-row-to-curb-inflation","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2016\/06\/colombia-raises-rate-10th-month-in-a-row-to-curb-inflation\/","title":{"rendered":"Colombia raises rate 10th month in a row to curb inflation"},"content":{"rendered":"
June 22, 2016<\/div>
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By CentralBankNews.info<\/u><\/a>
\n    Colombia’s central bank raised its policy rate for the 10 consecutive month and reiterated its statement from May that it must ensure that the recent shocks to inflation remain temporary and inflation converges towards its target in 2017.
    The Central Bank of Colombia raised its policy rate by another 25 basis points to 7.50 percent, as expected, and has now raised it by 300 points since embarking on a tightening cycle in September 2015. This year it has raised its key rate by 175 points.
    “Increases in food prices and the pass-through of nominal depreciation to consumer prices continue to exert inflationary pressures,” the central bank said, showing little inclination to pause in its tightening campaign.
    Colombia’s headline inflation rate rose to 8.2 percent in May from 7.93 percent in April, with the central bank again noting that the impact of the El Nino weather pattern on food prices and the magnitude of the depreciation of the peso had moved inflation and inflation expectations away from its target and also triggered indexation mechanisms.
    But core inflation eased to 6.55 percent in May from 6.69 percent and expectations embedded in public debt bonds for 2, 3 and 5 years eased to 4.0 percent and 4.5 percent from 4.3 percent and 4.7 percent in May.
   The central bank targets inflation of 3.0 percent, plus\/minus 1 percentage point, and Colombia’s government earlier this month raised its inflation forecast for this year to 6.5 percent.
    Colombia’s economy has been slowed by low oil and commodity prices with annual growth the first quarter of 2.5 percent down from 3.4 percent in the previous quarter as domestic demand slowed less than expected.
    The central bank said its staff had retained its growth forecast of between 1.5 and 3.2 percent, with 2.5 percent as the most likely figure.
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    The Central Bank of Colombia issued the following statement:
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“The Board of Directors of Banco de la Rep\u00fablica at today\u2019s meeting decided to increase the benchmark interest rate by 25 bp to 7.50%. For this decision, the Board mainly took into account the following aspects:<\/div>\n
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