Colombia cenbank minutes suggests continued interest rate hikes

viernes 13 de junio de 2014 16:13 GYT

By Nelson Bocanegra

BOGOTA, June 13 (Reuters) - Colombia's central bank on Friday suggested it may continue to raise its key interest rate in the coming months, as minutes of its last board meeting showed concern over household and business debt levels as the economy grows faster than expected.

Some board members said the economy is growing faster than first thought and its potential pace of expansion is also higher than indicated by current official estimates. Others said there was an "accumulation of risks" from increasing debt levels, the minutes of the last monetary policy meeting showed.

The central bank on May 30 raised the benchmark lending rate a quarter point to 3.75 percent to head off inflationary pressure as the economy gathers steam.

The bank's concerns indicate it will continue to raise the lending rate in the coming months, analysts said.

"Without doubt the minutes show that rate increases that began in April are just the starting point and that the bank will continue with its increase cycle," said Daniel Lozano, chief economist at brokerage Serfinco, who expects consecutive increases until 4.5 percent.

"It's a hawkish tone, these arguments show they will continue to raise the rate gradually and that the increases will be uninterrupted at least until July," said Angela Gonzalez, an analyst at Banco de Bogota.

Output has accelerated over the last year and the bank expects first-quarter economic growth of 4.8 percent compared with 2.8 percent in same the period a year ago. The government will publish the gross domestic product numbers on June 19.

The economy grew 4.3 percent last year and the central bank expects at least the same for 2014. The bank has not revealed its view of the economy's potential growth level.   Continuación...