The Board of Directors of the Central Bank of Colombia maintains the Benchmark Interest Rate at 4.5%

The Board of Directors of the Central Bank of Colombia in today's session decided to maintain the benchmark interest rate at 4.5%. This decision mainly took into account the following aspects:

• The US is expanding at a slower pace, and the euro zone and Japan show signs of gradual recovery. China continues to slowdown, while the output of the main countries in Latin America grows at low or negative rates. It is likely that the average economic growth of Colombia's trading partners in 2015 will be lower than in 2014.
• The US dollar has strengthened, and the risk premia in Colombia and other countries in the region have decreased. The international price of oil has increased. However, it is estimated that part of the accumulated fall in Colombia's terms of trade is permanent, affecting the dynamics of national income. 
• Colombian economy is adjusting to the new external conditions amidst an environment of slower growth in consumption and investment. Income originated in exports has fallen as a result of lower international prices, especially of oil.
• The labor market continues to be strong, and real interest rates are still expansionary. Likewise, it is expected that investment in civil works and construction continue to be dynamic, and that in time the real depreciation of the peso will start having a positive impact on the behavior of exporting sectors and those competing with imports. 
• Inflation increased in April, registering 4.64%, a figure higher than the forecast by the average of the market and by the technical staff at Banco de la República. Higher inflation is mainly explained by the increase in food prices, and, to a lesser extent, by the pass-through of the depreciation of the peso to prices. The average of core inflation indicators rose again, registering 3.84%.
• Analysts' inflation expectations for December 2015 stand at 3.92%, and those for May and December 2016 remained relatively stable and close to 3.0%. Those embedded in public debt bonds decreased, standing close to the long-term goal. 

Summarizing, the increase in inflation has obeyed to transitory factors and its expectations for the medium term are close to 3.0%, within a context of slowdown in aggregate demand. 

The Board will continue monitoring carefully the behavior and projections of economic activity and inflation in the country, the asset markets, and the international situation. The Board also reiterates that the monetary policy will depend on the information available.

Bogotá,