• The board of directors by majority vote cut its interest rate by half a percentage point to 2.75%. In this way, the countercyclical drive of monetary policy is continued.
  • Downward revisions to local and global growth suggest a substantial expansion of excess productive capacity and further deterioration of the labor market.

BOGOTA: Colombia's central bank board cut the benchmark interest rate by 50 basis points to 2.75% in a majority vote on Friday, as policymakers tried to boost the economy while a nationwide coronavirus quarantine rolls on.

The following is a Reuters translation of the statement accompanying the bank's decision:

The board of directors by majority vote cut its interest rate by half a percentage point to 2.75%. In this way, the countercyclical drive of monetary policy is continued.

This decision took into consideration the following elements:

– In April inflation stood at 3.5%, the average of core inflation indicators at 2.9%, and inflation expectations continued to drop reflecting weak aggregate demand, deteriorating employment and the presence of excess productive capacity.

– Downward revisions to local and global growth suggest a substantial expansion of excess productive capacity and further deterioration of the labor market.

– Financial market indicators have been corrected in recent weeks and the country's financing conditions have improved. The bank's measures have contributed to these results and will continue to be adopted for that purpose.

– Under these conditions, the balance of monetary policy risks suggests the convenience of providing an additional boost to the economy.

The decision to reduce the interest rate by half a percentage point had the approval of five members of the board. The remaining members voted to reduce the rate by a quarter of a percentage point.