Colombia’s central bank may need to damp internal demand as falling commodity prices widen the current account deficit, central bank co-director Ana Fernanda Maiguashca said.
“In spite of this deceleration which could give us a negative output gap, there is no space for monetary policy that generates a stimulus,” Maiguashca said at an event in Bogota organized by the National Association of Financial Institutions. “If anything, we’re at a point where we could need to de-stimulate this internal demand even more.”
The economy will expand at 2.8 percent this year, according to the central bank’s forecast, its slowest pace since 2009, after prices fell for the nation’s oil, coal and coffee. The country can no longer sustain the 4.5 percent growth rates seen in recent years, she said.
“The economy needs to pause for breath,” Maiguashca said. “It would be irresponsible to grow at the rates we used to have,” since this would imply a widening of the current account gap, she said.
Annual inflation accelerated to 4.74 percent in August, the fastest pace since 2009, as the weaker peso triggered a surge in the price of imported goods. Maiguashca said the figure was worrying, and higher-than-expected. Inflation expectations are still “anchored,” she said.
Maiguashca and her colleagues on the central bank’s policy committee have left the benchmark rate unchanged at 4.5 percent for the past year. The National Statistics Agency is scheduled to publish its second quarter GDP report on Thursday in Bogota.