Colombian President Juan Manuel Santos on Tuesday asked the central bank to think twice about further interest rate increases from the current 4% because it might impact the Andean nation’s growth.
Colombia like other Latin American nations such as Brazil, Chile and Peru have been raising rates to fight inflation spurred by higher fuel and food costs after having cut them to fight fallout from the global economic crisis.
“What we’re asking the central bank is to believe in the government’s economic policy and its structural changes, which will allow us to grow at high rates with low inflation, ” Santos told reporters.
“In that case there would be no need to keep raising interest rates. If the rates were to continue going up they run the risk of slowing growth a little and that could have negative repercussions. This is a respectful request.”
It was a rare public call by the government on the central bank but Santos said he was not trying to “interfere.” His finance minister is a member of the central bank’s board, which decides on the interest rate.
“As a former finance minister, I would have made a calculation that the (central bank) board should arrive at 4%,” Santos said.
On Monday, Colombia’s central bank hiked its benchmark interest rate for the fourth straight time to 4% as expected by market players.
Colombia, Latin America’s number-five economy, may grow nearly a scorching 6 percent this year due to strong internal demand and good terms of trade after expanding 4.3% in 2010 during its recovery from the global crisis.
