| BOGOTA, June 13
BOGOTA, June 13 Colombia's central bank on
Friday suggested it may continue to raise its key interest rate
in the coming months, as minutes of its last board meeting
showed concern over household and business debt levels as the
economy grows faster than expected.
Some board members said the economy is growing faster than
first thought and its potential pace of expansion is also higher
than indicated by current official estimates. Others said there
was an "accumulation of risks" from increasing debt levels, the
minutes of the last monetary policy meeting showed.
The central bank on May 30 raised the benchmark lending rate
a quarter point to 3.75 percent to head off inflationary
pressure as the economy gathers steam.
The bank's concerns indicate it will continue to raise the
lending rate in the coming months, analysts said.
"Without doubt the minutes show that rate increases that
began in April are just the starting point and that the bank
will continue with its increase cycle," said Daniel Lozano,
chief economist at brokerage Serfinco, who expects consecutive
increases until 4.5 percent.
"It's a hawkish tone, these arguments show they will
continue to raise the rate gradually and that the increases will
be uninterrupted at least until July," said Angela Gonzalez, an
analyst at Banco de Bogota.
Output has accelerated over the last year and the bank
expects first-quarter economic growth of 4.8 percent compared
with 2.8 percent in same the period a year ago. The government
will publish the gross domestic product numbers on June 19.
The economy grew 4.3 percent last year and the central bank
expects at least the same for 2014. The bank has not revealed
its view of the economy's potential growth level.
"Some board members see that both potential and observed GDP
growth are above that projected by the bank's technical team,"
the minutes said.
President Juan Manuel Santos on Friday said that expansion
above the government's 4.7 percent target is possible this year
with growth likely to be more than 5.5 percent next year.
The minutes also showed some policymakers raised concern
over risks from increasing debt levels. The higher lending rate
will help pull some of the stimulus away from borrowers after 12
months of holding the rate at 3.25 percent, the minutes said.
"They highlighted that an increase in the interest rate is
in line with the objective of reducing stimulus to the
accumulation of risks, even more so when the prolonged low
interest rate is taken into account," the document showed.
Colombia's economy has been growing at 4 percent or faster
since 2010 and inflation is controlled, at around 3 percent or
the center of the central bank's 2 percent to 4 percent target
(Additional reporting by Helen Murphy; Editing by Chizu