LatinNews Regional Monitor: Andean Group - 28 April 2017

COLOMBIA | Economy on an upward curve. The director of the Colombian central bank, Juan Pablo Zárate, revealed in an interview on 20 April that he expected the economy to maintain its solid recovery after a poor performance in 2016. Inflation and low growth has been a major worry throughout the year, in addition to a substantial fiscal deficit. However, Zárate was keen to point out the progress that has been made in addressing these concerns, demonstrating that prudent monetary policy had reined in surging inflation and expected it to decrease to 4% by the end of 2017. Mid-2016 had seen inflation rise as high as 9%, however the central bank responded by increasing interest rates and, as inflation has fallen away, the bank has subsequently implemented a gradual reduction in the interest rate, currently at 7%. Zárate indicated that this trend would continue until inflation reaches its target rate of 3%, whereupon the central bank would continue to decrease the interest rate to around 1.5%, in line with International Monetary Fund (IMF) recommendations.

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