Colombia central bank expected to hold interest rate steady in March: Reuters poll

FILE PHOTO: General view of Colombia's central bank in Bogota
FILE PHOTO: General view of Colombia's central bank in Bogota, Colombia October 9, 2019. REUTERS/Luisa Gonzalez

March 19, 2021

BOGOTA (Reuters) – Colombia’s central bank will leave its benchmark interest rate stable for the sixth month in a row in March, according to analysts, to keep supporting the economy as it recovers from the coronavirus pandemic, a Reuters poll revealed on Friday.

All 19 analysts expect the central bank to hold the interest rate at the historic low of 1.75% after 12-month inflation – which continues to sit well below the bank’s targeted 3% – beat expectations in February, rising 1.56%.

Some of the analysts see the rate being held following a majority – rather than unanimous – vote from among the bank’s seven board members, with a minority continuing to support even lower interest rates.

In January, Colombia’s economy contracted 4.63%, the government said on Thursday, more than double the contraction seen in December, following renewed restrictions on movement due to a second wave of coronavirus infections.

“Despite having left open the possibility of making a new cut in its reference rate, we think it’s most likely that the central bank’s board of directors will maintain its repo rate at the historic low of 1.75% throughout 2021,” Fiduciaria Bogota said in a report.

In an interview with Reuters last week, central bank co-director Roberto Steiner said he feels “comfortable” with the current rate, which he believes is very expansive.

More than half of the analysts expect the bank to hold the interest rate stable this year, while the rest said they expect the rate to end the year between 2% and 2.5%.

(Reporting by Nelson Bocanegra; Writing by Oliver Griffith; Editing by Alistair Bell)