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Central Bank Head Sees Room to Cut Colombia Rate as CPI Eases

  • Board is working on improving communications with investors
  • Uncertainty about nation’s potential growth after oil decline

Colombia can cut its policy rate toward a more neutral level as inflation data improve, according to the head of the nation’s central bank.

The current real, or inflation-adjusted, rate remains “high and restrictive” and can be brought down through borrowing-cost reductions as consumer price increases slow, according to Governor Juan Jose Echavarria. No one knows exactly what the long-term neutral rate is, but many estimates place it at 1 or 2 percentage points above inflation, he said.