BOGOTA, Nov 11 (Reuters) - The credibility of Colombia’s central bank will be at risk if it does not act to relieve inflationary pressures, board member Carlos Gustavo Cano said on Wednesday, as the country continues to grapple with consumer price figures well above the bank’s target range.
Lowering inflation down toward the 2 percent to 4 percent medium- and long-term target range will require active monetary policy, Cano said.
“Both polls and probability models from the bank show evidence that medium-term expectations are de-anchored from the objective fixed by the board,” Cano said during a presentation.
“Not acting in a forceful and sufficient manner would put the bank’s credibility before the public at serious risk,” he said.
The board raised the benchmark interest rate by an unexpected 50 points, to 5.25 percent, at its October meeting, amid gains in consumer prices. Inflation was up 5.89 percent last month.
Contrary to the opinions of the majority of his fellow board members, who blame inflation increases on price pressures caused by the El Nino drought and currency depreciation, Cano said the indicators suggest demand pressures. (Reporting by Nelson Bocanegra; Writing by Julia Symmes Cobb; Editing by Leslie Adler)