Colombia

Colombia is trying to cut interest rates at a pace that won’t surprise markets, trigger destabilizing capital outflows or jeopardize the aim of hitting the inflation target range by mid-2025, the head of the central bank said, Bloomberg News reported. The fastest consumer price rises among peers, and above-target inflation expectations are “elements of concern” that call for prudence from policymakers, Governor Leonardo Villar said. But if the inflation outlook brightens the bank might accelerate the pace of monetary easing.

The socialist government of Venezuela is discussing compensation with at least two Colombian companies whose assets were seized under late President Hugo Chávez, Bloomberg News reported. Colombia’s largest cement maker, Cementos Argos SA, is in talks involving the possible takeover of a state-owned cement plant near Venezuela’s Caribbean coast, according to German Umaña, Colombia’s minister of commerce, trade and tourism. An expropriated subsidiary of Cali-based sugar exporter Comercializadora Internacional de Azúcares y Mieles, Ciamsa, is also in negotiations for compensation, Umaña said.

Colombia’s slowing inflation and weak economy call for more aggressive interest rate cuts, though policymakers must remain vigilant to potential risks ahead, according to a member of the central bank’s board, Bloomberg News reported. The fact that inflation has been above target for the past three years demands prudence, even after it eased in February to the slowest pace in nearly two years, central bank co-director Bibiana Taboada said in an interview.

Colombia’s economy grew even slower than the central bank’s gloomy forecast last year, potentially opening the door to faster interest rate cuts, Bloomberg News reported. Gross domestic product rose 0.6% in 2023 from a year earlier, the national statistics agency said Thursday, lagging the bank’s forecast of a 1% expansion. Excluding the Covid-19 crisis, that was the worst result since 1999. The economy expanded 0.3% in the fourth quarter from a year earlier, below the 0.8% median forecast of analysts surveyed by Bloomberg.

Colombia maintained the pace of monetary policy easing with a second straight quarter-point cut to interest rates as consumer price increases remain above target and inflationary threats abound, Bloomberg News reported. The central bank cut its key rate to 12.75%, Governor Leonardo Villar told reporters in Bogota on Wednesday. Ten of 26 economists surveyed by Bloomberg correctly forecast the move, while 15 expected a half-point cut and one a cut to 12.25%. The board voted 5-2 for the 25 basis-point cut, with the minority favoring a larger half-point reduction.

Colombia’s economy grew at its fastest pace in nine months in November, beating all forecasts and calming fears of a recession, Bloomberg News reported. The ISE economic activity index, a proxy for gross domestic product, rose 2.3% from a year earlier, the statistics agency reported Thursday. That was its first expansion in four months, and exceeded all 15 forecasts of economists surveyed by Bloomberg. Agriculture, oil and mining, government services and the financial sector led the expansion, while manufacturing and construction contracted.

Colombia delivered its first interest rate cut in three years, lowering borrowing costs by 25 basis points as signs of a faltering economy overtake inflation concerns, Bloomberg News reported. The central bank reduced its benchmark rate to 13%, Governor Leonardo Villar told reporters in Bogota after Tuesday’s policy meeting. The decision was backed by five of the bank’s seven board members, with two voting to keep the rate at 13.25%. Twelve of 22 economists surveyed by Bloomberg correctly forecast the move, while the rest expected interest rates to remain unchanged.

Colombia’s central bank could put its credibility at risk if it rushed to cut interest rates prematurely, according to its newest board member, Bloomberg News reported. “There’s a big risk in easing early then having to reverse course,” co-director Olga Lucia Acosta said Tuesday, in her first interview since she was appointed by President Gustavo Petro last year. Brazil, Peru and Chile are all easing monetary policy as inflation cools across Latin America.

Prosecutors in Colombia on Thursday announced criminal indictments against 60 people, including dozens of former government officials, on graft charges tied to the transnational corruption scandal involving disgraced Brazilian contractor Odebrecht, the Wall Street Journal reported. The charges represent more fallout from the extensive bribery network that Odebrecht in 2016 admitted to creating in a dozen countries, from Latin America to Africa, to bribe politicians and government officials for lucrative infrastructure contracts.