Colombia | Banrep holds rates at 4.5% and a prolonged monetary pause is anticipated

The central bank decided unanimously to hold interest rates at 4.5% for the third consecutive month, as anticipated by BBVA Research. The decision was mainly driven by a further slowdown in developed economies (excepting United States), increased risk aversion in emerging economies, a deterioration in the terms of trade which affects national income growth, and a core inflation that remains below the 3% target. They also estimate that GDP growth will likely reach 5.0% in 2014 and fall to 4.3% in 2015. Finally, BBVA Research continues to expect that the next rate hike will not occur before May of 2015 and will be contingent on the strength of the recovery of the US economy and the positive impact of a more depreciated exchange rate on exports and the industrial sector.

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