Central Bank Left Rate Unchanged Friday In Unanimous Decision

Colombia Central Bank kept the overnight rate unchanged at 1.75% in a unanimous decision.

• This was a change from two prior split decisions where two board members voted for a 25bps rate cut.
• BanRep upgraded the growth forecast and also highlighted their confidence regarding upcoming fiscal adjustment.

Highlights from the statement included:

• "The growth forecasts for this year have been revised upwards. The technical team preliminarily estimates it at 5.2%."
• "Labor market indicators continue to be very weak. The unemployment rate in January reached 17.3%."
• "Some factors, including the recent increase in medium and long-term interest rates in international financial markets, suggest that, at the margin, these conditions have tightened."
• "The decision to keep the interest rate stable is based largely on the confidence that Congress will approve an adequate fiscal adjustment program to achieve a return to a sustainable path for public finances and economic growth."

Governor Villar commented:

• Colombia inflation expectations are well anchored
• Colombia GDP growth recovering after January lockdown