Columbia Prudent Monetary Policies Despite Probable Food Price Increase

The central bank of Colombia is not yet certain of food price increase in the second half of the year according to the reports of lawmakers on Wednesday. The report states that they would be cautious with their monetary policies to be able to reach the inflation target.  

Although, the consumer prices are presumed to grow by 3 percent by the end of the year with the 2 to 4 percent long-term mid-point target range. The rise of food prices could hinder inflation reduction.

The bank stated in their report to Congress that possibility of an increase in food prices for the latter half of the year should not be closed with lesser crop output or the effect of climate change.

It is necessary to be “prudent” with monetary policy to spur economic activity without changing the inflation target. Also, it can be noted that report described the current interest rate of 4.5 percent is “moderately expansive”.

Predictions for March says that the seven-member board would decrease their interest rates by 25 basis points to 4.25 percent during the April meeting. This would boost the economic growth of the bank and the government to 2.7 percent forecast for the year.