Colombia Bonds Rally on Slowest Inflation Since 1955; Peso Rises

Colombia’s peso bonds rose for a fifth day, pushing yields to a record low, as the slowest inflation since 1955 encouraged speculation that the central bank will lower borrowing costs further.

Yields on peso bonds maturing in 2024 decreased two basis points, or 0.02 percentage point, to 4.94 percent at 8:49 a.m. in Bogota, according to the central bank. That is the lowest level since the securities were issued in 2009. The price rose 0.210 centavo to 143.188 centavos per peso.

Colombia has entered a “sustainable low inflation phase,” which means policy makers can concentrate on spurring economic growth to its potential annual rate of 4.8 percent, Finance Minister Mauricio Cardenas said yesterday in a phone interview. The central bank has cut its policy rate six times beginning in July to 3.75 percent, the lowest level among major Latin American economies. The next rate-setting meeting is scheduled for March 22.

Consumer prices rose 1.83 percent in February from a year earlier, the government reported yesterday. That is the slowest annual pace since 1955, when General Gustavo Rojas Pinilla ruled as dictator. The median forecast of 23 analysts surveyed by Bloomberg was for an inflation rate of 1.89 percent.

The peso appreciated 0.1 percent to 1,808.40 per U.S. dollar, paring its drop this year to 2.3 percent.

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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