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Central Bank of Colombia to release interest rate decision

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Central Bank of Colombia to release interest rate decision

colombia bank
Photo: Reuters

Colombia’s central bank will hold its benchmark interest rate at its final annual meeting today.

Bogota plans to continue with current COVID-19 measures to alleviate the negative impact of the pandemic. Interest rates dropped this year from 4.25% to 1.75%. It would be the third consecutive month that policymakers have maintained the rate after the five months of lockdown that shuttered businesses and skyrocketed unemployment.

According to the National Bank, the expansive monetary policy will continue to establish low-interest rates and control of inflation, below 3% in 2021. Along with Mexico and Brazil, Colombia is the only country that lowered its interest rates amid economic slowdown, though this will be rethought as the country’s finances may weaken affecting potential investments and domestic consumption.

Colombia’s pace of recovery will steadily continue in 2021. Inflation rates will remain constant, but domestic demand will continue to weaken. Short-term, drastic change is highly unlikely as current fiscal and monetary incentives will stabilise the Colombian economy. However, this stimulus will not be sufficient to halt a 6% drop in GDP on the year. The economy will not recover so rapidly from the crisis but expect a consolidation in utilities and production sectors in the long-term.

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