Banco de la República Holds Its Intervention Interest Rates

At a meeting today, the Board of Directors of Banco de la República decided not to change its intervention interest rates. As a result, the base rate for repo auctions will remain at 9.25%. 

Inflation stayed on a downward trend throughout September, primarily because of the drop in food inflation. The core inflation indicators also declined in terms of their annual rate.  However, non-tradable inflation, excluding food and regulated prices, still shows no sign of a descending trend. 

Available figures indicate growth in aggregate demand in the economy remains strong. In contrast, the uncertainty on international financial markets continues and, as a result, the estimates for economic growth in 2008 with respect to Colombia’s major trading partners have been revised downward.

Accordingly, the Board of Director believes it is appropriate to prolong the pause in intervention interest rate hikes.  The risks mentioned by the Board at its last meeting with respect to the forecasts for inflation and economic growth still exist.

The Board will continue to conduct a careful review of economic developments in and outside Colombia, and their impact on inflation pressures and economic activity.