BOGOTA Jan 7 Colombia central bank board member
Adolfo Meisel expects the benchmark lending rate to remain
steady for "some time" but says another cut may be necessary if
inflation slows further, according to a local newspaper report
published on Tuesday.
Meisel, one of seven policymakers on the bank's board, said
in an interview with daily newspaper El Tiempo that borrowing
costs, at 3.25 percent, were at "a good level." He added,
however, that a more expansionist monetary policy might be
needed if inflation slips further below the bottom rung of the
bank's target range.
"If it drops too much below the target range, well, we would
have to think about a monetary policy that's more expansionist,"
the newspaper quotes Meisel as saying. "That means lowering the
Inflation ended 2013 at 1.94 percent, below the bank's goal
of between 2 percent and 4 percent.
The board maintained the benchmark interest rate at 3.25
percent for the ninth straight month in December as the economy
began to pick up steam after a weak start to the year.
Colombia's economy, which relies on commodities like oil,
coal and coffee, grew 5.1 percent in the third quarter, beating
expectations and accelerating from 2.8 percent in the first
quarter and 3.9 percent in the second. The growth helped take
the GDP closer to the government's official target of 4.5
percent for 2013.
The economy expanded 4.2 percent in 2012, far below the 6.6
percent expansion in 2011.
The minutes of the last central bank board meeting on Dec.
20 indicated there had been discussion about a rate cut. Some
board members said it was "necessary to evaluate the coherence
of the monetary policy rate," given the economy's potential for
faster growth and low inflation, the minutes said.
Expanding economic output has failed to bring inflation up
even to the lower end of the bank's target range and means, in
one board member's view, that the output gap is wider than
That output gap, or the economy's capacity to produce versus
what it actually does, indicates faster growth is possible
without leading to a rise in prices, the minutes said.
"If we see the economy slowing we have the possibility of
reactivating it with monetary policy," Meisel, who joined the
board early last year, said in the newspaper interview. "If
things remain the same with no change, I think the current
posture could be held over the medium term."