TEXT-Colombia central bank statement on interest rates

BOGOTA, Sept 30 Fri Sep 30, 2011 7:36pm EDT

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BOGOTA, Sept 30 (Reuters) - Colombia's central bank kept its benchmark interest rate steady on Friday at 4.50 percent in line with market expectations. [ID:nS1E78T0QX]

Following is a translation of the text of the announcement published on the central bank's website: (www.banrep.gov.co/)

The Board of the Central Bank at its meeting today decided to keep the benchmark interest rate unchanged at 4.5 percent. The decision was made taking into account the following:

* The international environment has deteriorated in the weeks after the last board meeting. Concerns about sovereign debt problems have grown, and growth forecasts in the United States and Europe in 2011 and 2012 have been revised down.

* In some of the economies of Asia and Latin America, new information points to a moderation in growth. International prices of commodities have fallen but remain at high levels.

* In Colombia, the first half data showed economic activity expanding at a good pace (5 percent), similar to what was projected. Growth has been driven by the strong dynamism of domestic demand, especially from the private sector which grew in the second quarter at an annual rate of 11.7 percent. For the third quarter, new available information suggests that growth could be higher than in the first half. Thus, the growth forecast range for 2011 (between 4.5 percent and 6.5 percent) continues to have a high probability.

* Annual growth in bank lending has stabilized at a high rate in an environment of real interest rates of loans that increased but remain below historical averages. The most dynamic portfolio remains consumption, with increases almost three times higher than the estimated nominal GDP growth for 2011. The index of prices for new housing continued to rise and peaked in July, the series record, calculated since 1997.

* Inflation expectations at different periods and inflation forecasts for the end of 2011 and 2012 have not had major changes and are within the target range.

In this context, the balance of risks was not substantially changed from the previous month. For this reason, the board considered it appropriate to continue the pause in benchmark interest rate increases. It also considers that the current rate level keeps it in a good position to respond to new information on the global and national economies.

The Board will continue carefully monitoring the international situation, and the projections and behavior of inflation, growth, the behavior of asset markets and reiterated that monetary policy will depend on the new available information.

Finally, given the recent behavior of the exchange market and increased international economic uncertainty, the board did not renew the program of daily purchases of international reserves. In turn, considering the extreme volatility in financial markets, the central bank shall call auctions in the spot market for an amount of $200 million when the representative market rate (TRM) deviates 2 percent or more (up or down) from its moving average of the order of 10.

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