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Colombia interest rates
On Friday, the country cut its benchmark interest rate for the fifth consecutive month. While previous cuts came in at 25bps increments, the central bank took out the axe this time around and chop rates by 50bps to 3.25 per cent – the lowest in Latin America.
In the longest easing cycle in over four years, starting in July last year, the very orthodox Banco de la República has chopped 150 basis points off its overnight lending rate in an attempt to reignite a slowing economy.
Last July, Colombia made its first rate cut since 2010. Since then, it has been on a chopping spree. On Monday, the Andean country’s central bank trimmed rates once again by a quarter point to 4 per cent.
So far the bank, with governor José Darío Uribe at the helm, has lowered interest rates at five of its last seven meetings. Now, it has reached the lowest level in Latin America.
He’s been named Latin America’s central banker of the year (okay, by a trade publication) and re-appointed to be his institution’s general manager for a final four-year term in October. Analysts praise him for promoting growth while keeping inflation in check. Meet Colombia’s central bank chief, José Dario Uribe.
The recently-appointed finance minister, Mauricio Cárdenas, announced Thursday in Bogotá that Colombia’s gross domestic product grew 4.9 per cent in the second quarter, after expanding only 4.7 per cent in a rocky first quarter that was held back by weak growth of industry, oil output, and exports.
It was quite a week for Colombia. It all started with an attack on one of Ecopetrol’s pipelines on Sunday, followed by President Juan Manuel Santos asking his whole cabinet to hand in resignations on Wednesday and the removal of finance minister Juan Carlos Echeverry on Thursday.
Finally, on Friday –after a bomb blast in the troubled southwest that left one dead – Colombia’s Central Bank chopped its benchmark interest rate 25 basis points, down to 4.75, for the second consecutive month to try and boost a still strong, but increasingly slowing economy.
The sense of uncertainty in the global economy is palpable, and rightly so. China is slowing – no one is sure by how much; Europe’s sovereign debt crisis is going from bad to worse – but no one knows how much worse it will get; and the US is still just muddling through.