The primary objective of monetary policy is to reach and maintain a low and stable inflation rate, and to achieve a long-term GDP growth trend.

This is the only way to achieve sustained growth rates that will generate employment and improve the population’s quality of life. Otherwise, if the economy does not grow on a sustained basis, sooner or later a crisis will occur with serious consequences for the economy, leading to worsening social indicators, loss of public confidence, lowered investment and higher unemployment.

The board of the Central Bank decided to keep the lending rate unchanged at 7.50% in a 4-to-3 decision at its 27 January monetary policy meeting, which was the first to be headed by recently appointed Governor.

The decision to hold rates came after inflation eased for a fifth consecutive month in December, falling to 5.8%, the lowest reading in 2016. According to the Bank’s official statement, the supply-side shocks that had derailed inflation from its target continue to reverse, as evidenced by a slowdown in food prices. Despite the improvement, inflation expectations remain above the 3.0% target.

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http://banrep.gov.co/en/node/22746

http://www.banrep.gov.co/sites/default/files/publicaciones/archivos/cgc_oct_2016.pdf

http://www.focus-economics.com/countries/colombia/news/monetary-policy/central-bank-holds-the-lending-rate-unchanged-in-january

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