Central Bank of Colombia Raises Rate 25bps to 4.50%

The Central Bank of Colombia lifted its benchmark monetary policy interest rate by 25 basis points to 4.50% from 4.25% previously.  The Bank said (translated): "Since March, the average measures of core inflation has been a slight upward trend in June and reached a level close to the midpoint of the target range (3% + / - 1 percentage point).  Inflation expectations at various horizons are also within that range." and also noted "The increase in the rate of intervention aims to maintain inflation within the target range this year and next and help prevent future financial imbalances that threaten the sustained growth of the economy."

Previously the Central Bank of Colombia also increased its interest rate by 25 basis points to 4.25% at its June monetary policy meeting this year.  Colombia reported annual inflation of 3.23% in June, compared to 3.02% in May, 2.84% in April, and 3.19% in March, this compares to the Bank's inflation target of 3%.  Goldman Sachs is forecasting 2011 GDP growth at 5.5%, while Morgan Stanley is forecasting 4.9% growth for the Colombian economy.  The Bank noted that Colombia saw economic growth of 5.1% in the first quarter.

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