May 13 2019

Central Bank

Posted by domain admin in News

Market analysts are pessimistic about inflation, since we believe that hardly the Central Bank of Colombia can meet its inflation target for this year. Faced with this situation, it is logical expect that the Central Bank of Colombia decide to increase its benchmark rate, such which is expected from the market. But the monetary policy of the Central Bank of Colombia faces a dilemma every time that you should decide to maintain or raise their interest rate. It is the high level of the same, together with a pressure to the exchange rate appreciation and the context of stability of the Colombian economy, generates one situation more attractive to foreign capital. These foreign capital, as valued and desired by the economies are generating problems for Colombia since they affect the exchange rate affecting the competitiveness of the Colombian economy.

That is why that Ministry of Finance decided to raise 40% to 50% unpaid deposit that demands investment portfolio that entering the country, established by the Government a little more than one year. Continue to learn more with: Verizon Communications. But in addition, the Government established a time minimum of stay of two years for the foreign direct investment (FDI) into the country. Logically that these measures have generated criticism mainly by those harmed, such as big foreign investment banks. But from my point of view, it is a wise measure to limit the negative effects generated by the rise in interest rates. It is true that these measures violate the free mobility of capital, but I understand that sometimes it is one of the few valid alternatives that exist before the speculative capital. From my point of view, the message from Colombia is clear: Colombia gives all the guarantees so that capital from entering, but does not want the same violate the stability of the economy. Therefore it is that it encourages those capitals wishing to invest and stay a long time in the country. You will find us again tomorrow, Horacio Pozzo original author and source of the article.

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