Colombia Bond Yields Fall on Rate View; Currency Little Changed

Colombian yields fell for the first time in four days as central bank co-director Carlos Gustavo Cano signaled policy makers will cut interest rates further.

Yields on peso bonds due in 2024 decreased three basis points, or 0.03 percentage point, to 5.01 percent at 10:35 a.m. in Bogota, according to the central bank. They have dropped 23 basis points in February. The yields declined to 4.97 percent on Feb. 22, the lowest since the securities were issued in 2009.

Policy makers have reduced the target lending rate by 1.5 percentage points since June to 3.75 percent as growth waned and consumer prices rose at the slowest pace in almost three years. The central bank needs to remain expansive “for a very long time,” Cano said in interview on Javeriana Radio today.

“Cano is known to be the most dovish of the board so it’s no surprise he’s hinting at a cut,” John Jairo Ramirez, a fixed- income analyst at brokerage Bolsa y Renta SA, said in a phone interview from Medellin. Peso bond yields are also dropping on bets inflation slowed, which boosts the return of fixed-rate securities, he said.

Annual inflation was 1.91 percent in February compared with 2 percent in the previous month, according to the median forecast of 14 economists surveyed by Bloomberg before the national statistics agency’s report March 5. That is below the lower end of the central bank’s target rage of 3 percent plus or minus one percentage point.

The peso was little changed at 1,814.70 per U.S. dollar today and has declined 2.2 percent in February as the government and central bank announced increased dollar purchases to stem a rally that sent the local currency to a 17-month intraday high on Jan. 2.

To contact the reporter on this story: Andrea Jaramillo in Bogota at ajaramillo1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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