Colombia Central Bank Holds Rate at 12.25%, Approves $2 Billion Reserve Purchase

Colombia's central bank board voted by majority on Friday to hold its benchmark interest rate at 12.25%, citing slowing economic growth and uncertainty over public finances. The board also approved the purchase of $2 billion from the government to shore up reserves, board chief Leonardo Villar said. A minority of analysts had expected the hold, with 13 of 31 respondents in a Reuters poll predicting an unchanged rate; 17 forecast a rise to 12.5%. The board said annual growth likely slowed in the third quarter, with third-quarter figures due in mid-November, and called for "rigorous review" of a fiscal reform bill sent to congress Thursday by President Abelardo De La Espriella's government, which aims to cut public spending by about 15%. Annual inflation was 6.29% through September, below expectations but still above the bank's 3% target. The $2 billion purchase, requested by the finance ministry, supplements the bank's accumulation program running since August. Villar said it is not yet clear whether the rate-hike cycle has ended.