By Jack Kimball
BOGOTA, March 15 Colombia's central bank has
room to lower its benchmark interest rate but the seven-member
board must also be careful and consider other factors, said one
of the members, Cesar Vallejo.
Colombian policymakers have slashed the benchmark interest
rate by 150 basis points since mid-2012 to its current 3.75
percent, the lowest in the region, as they battle against
weakening manufacturing data and overseas sales.
"There's space in the sense that there's lower inflation,
output growth is below its potential. In that sense there's
space but there are also other factors, for example, people's
indebtedness, government plans for public investment," he said.
"One must be careful when lowering interest rates because
any circumstance can change the scenario," Vallejo, considered a
more neutral member of the board, told journalists on Friday.
The central bank will meet on March 22 to decide on its
interest rate when two new co-directors appointed by President
Juan Manuel Santos will participate for the first time.
Colombia will also release a series of important economic
data next week including gross domestic product for the fourth
quarter and full-year 2012.
Industrial production fell in seven out of 12 months last
year, and retail sales remained weak. Exports have fallen in six
of the last 12 months.
Finance Minister Mauricio Cardenas told local radio on
Tuesday he expects economic growth to have been between 3.8 and
4 percent last year, slightly higher than the central bank's
estimate of 3.6 percent but lower than an initial forecast.
Colombia's economy expanded 5.9 percent in 2011.
In late February, Carlos Gustavo Cano, the most expansionist
member on the bank's board, said the central bank needed to
continue its expansive monetary policy for "a good while".