Colombia | Pause in monetary policy interest rate hikes was expected

Colombia's central bank decided to maintain its monetary policy rate unchanged at 4.50% in August as expected by the market and BBVA. Additionally it decided to reduce the maximum purchase amount of international reserves from USD 2,000 million to USD 1,000 million in 4Q14 and expressed greater possible discretion on daily purchases of foreign exchange. Economic growth decelerated during 2Q14 towards Colombia's potential growth output and it is expected to remain at 4.5% during the second half of 2014, such that growth in 2014 reaches 5.0% (BBVAe 4.9%). The main concern going forward for the central bank is the impact of the uncertain global economic recovery on a small open economy such as Colombia.

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