(Adds comments from second cenbank board member)
By Carlos Vargas and Nelson Bocanegra
MEDELLIN, Colombia May 8 Colombian central bank
board member Adolfo Meisel said on Thursday he expects the bank
to continue an expansionist monetary policy for the time being
even though it lifted rates last month for the first time in
more than two years.
The Andean nation's economy is enjoying a period in which
growth and consumption are picking up without inflation
concerns, though a recent influx of foreign investment has
caused the local currency to firm sharply.
The central bank raised the benchmark interest rate a
quarter point to 3.5 percent on April 25 as policymakers sought
to get ahead of any future inflationary pressure as the economy
The central bank could also extend the dollar purchase
program it launched in April beyond its scheduled expiration at
the end of June, Meisel said, by which time it is scheduled to
have bought up to $1 billion.
"We have historically high reserve levels, but there are
countries that have higher reserves than ours. In other words we
can't rule out that we will increase dollar purchases," he said
when asked if the purchases would continue beyond June.
Meisel was attending a bankers' forum in Medellin,
Colombia's second-biggest city.
Colombia is the world's No. 4 coal exporter and heavy
investment in its oil sector pushed up output to 1 million
barrels per day in 2013. It is also the world's biggest producer
of washed arabica coffee, a premium kind.
The peso touched its strongest level since October on
Thursday at 1,898 to the dollar due to a recent rise in foreign
investment in its financial assets spurred by J.P. Morgan's move
to raise the weighting of Colombian government debt in its
Meisel said he expects inflation to rise to around the
central bank's 3 percent target by the end of the year. He said
he doubted that the El Nino weather phenomenon, which brings dry
weather, would have any lasting impact on food and energy
prices. El Nino could start in in the next few months,
Annual inflation through April was 2.72 percent.
Another board member at the Medellin forum, Juan Pablo
Zarate, told Reuters he expected the government's statistics
agency, DANE, would revise its 2013 GDP growth figure of 4.3
percent, suggesting its number may not fully reflect a rise in
consumer demand in the fourth quarter of last year.
He said he also expected the economy to grow more than the
4.3 percent estimate of the central bank's technical team.
Finance Minister Mauricio Cardenas has said he expects expansion
of 4.7 percent for this year.
(Writing by Peter Murphy and Helen Murphy; Editing by Chris
Reese, Peter Galloway and Andrew Hay)