Policy makers should also step up their purchases of dollars, Santos said in a July 20 speech to mark Colombian Independence Day.
“I have asked the central bank to study a cut in interest rates, and evaluate a more aggressive purchase of dollars to increase our international reserves,” Santos said. “This will also help us confront the phenomenon of revaluation.”
The government is worried by signs that the economy is slowing, even though growth remains faster than the world average, Santos said. Industrial output fell for a third straight month in May on a year-on-year basis, the national statistics agency said last week.
Fourteen economists surveyed by Bloomberg forecast that the central bank will hold its benchmark interest rate at 5.25 percent at its July 27 policy meeting, while six analysts forecast a quarter-point cut.
Colombia raised its benchmark rate nine times in the year through February, bucking a global trend for lower borrowing costs. The bank last cut rates in April 2010.
The Colombian peso has appreciated 8.9 percent this year, the biggest gain of 170 currencies tracked by Bloomberg.
Colombia’s central bank has often ignored suggestions from Santos and his predecessor, former President Alvaro Uribe. Last month, policy makers kept their daily dollar purchases unchanged at $20 million, even after Santos met with bank chief Jose Dario Uribe and other board members and urged them to increase the amount.
In January, the central bank raised its benchmark interest rate a quarter point, after Santos had said such a move wouldn’t be “appropriate.”
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