The board of directors of the Banco de la República de Colombia decided by a majority of six votes to one to maintain interest rates at 1.75 %, as reported in a statement by the entity after its monetary policy meeting.
Among other factors, the entity took into account that inflation at the end of March stood at 1.51 % year-on-year, while core inflation stood at 0.94 %. The projections of the agency’s technical team point to inflationary levels being within the target range of 3 % between 2021 and 2022.
On the other hand, central banks managers revised up the GDP projection for 2021, from 5.2 % to 6%, taking into account a better-than-expected performance of the economy in the first quarter. However, the outbreaks of Covid-19 and the uncertain evolution of the virus, as well as the uncertainty due to the tax reform proposal, could alter this projection.
The Central Bank warned that the increases in unemployment in March (14.2 %) and poverty (42.5 % in 2020) are facts “that justify a historically low policy interest rate like the current one.“
“Under these conditions, and taking into account the balance of risks, the board decided to maintain the intervention rate at 1.75 % by a majority of six votes to one, which voted to reduce it by 25 basis points“, the institution explained.