Colombia's central bank held its benchmark interest rate steady at 3.25 percent, as widely expected, and confirmed its forecast for economic growth this year of 3.5 percent to 4.5 percent and that inflation should return to the bank's target range as a shock to food supply is diluted.
The Central Bank of Colombia, which has held rates steady since April after cutting by a combined 100 basis points in the first three months of the year, also confirmed its estimate for third quarter growth of between 3.8 percent and 5.4 percent.
In the second quarter, Colombia's Gross Domestic Product rose by 2.2 percent from the first quarter for annual growth of 4.2 percent, up from 2.8 percent. In 2012 Colombia's economy expanded by 4.0 percent.
"Interest rates remain at levels that stimulate aggregate spending in the economy," the central bank said.
In its quarterly report from earlier this month, the central bank forecast 2014 growth of between 3 percent and 5 percent and third quarter growth of 3.8-4.5 percent, putting 2013 growth within reach of a forecast 4.0 percent despite a weak start to the year.
The central bank's board also agreed on an inflation target of 3.0 percent, plus/minus 1 percentage point, for 2014, unchanged from this year.
In October Colombia's inflation rate fell to 1.84 percent from 2.27 percent in both September and August due to lower food prices and the bank said one-year inflation expectations fell and are now below 3 percent.
"To the extend that supply shocks are diluted and aggregate demand continues to be driven by expansionary monetary policy, expectations are expected to converge to the long-term goal," the bank said.
Household confidence recovered in October, the bank said, along with improved sales or durable goods and surveys suggest a rise in shipments and manufacturing production. Although growth in total credit slowed last month, it remains higher than the rise in nominal GDP.
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