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Colombia's finance minister does not rule out rate cut this week
October 25, 2017 / 7:15 PM / in 2 months

Colombia's finance minister does not rule out rate cut this week

BOGOTA, Oct 25 (Reuters) - Colombian Finance Minister Mauricio Cardenas said on Wednesday he does not rule out a vote this week by the central bank to cut the benchmark interest rate to help bolster economic growth as inflation begins to ease.

Cardenas, who represents the government on the seven-member policy board, expressed a contrary view to the market, which expects the bank to hold the rate at 5.25 percent for a second consecutive month.

According to a Reuters survey published on Monday, analysts forecast policymakers will hold the rate through year-end and then cut next year once inflation reaches about 3.5 percent. Annual consumer prices rose 3.97 percent last month, just within the bank’s target range of between 2 and 4 percent.

“The economy has controlled inflation at the moment and growth that’s below expectations,” Cardenas told reporters.

Inflation expectations for this year fell to 4.09 percent in the Reuters poll from 4.20 percent the previous month. Growth estimates for the year came to 1.6 percent, below the government’s target of 2 percent.

“The economy at this time does not need neutral monetary policy, it needs counter cyclical monetary policy,” Cardenas said.

The central bank cut 250 basis points from the interest rate between December and August in a bid to stimulate growth in the economy, which has been hit by a decline in domestic consumption and international oil prices. (Reporting by Carlos Vargas and Nelson Bocanegra; Writing by Helen Murphy; Editing by Leslie Adler)

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