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BOGOTA, July 9 (Reuters) - Colombia’s economy could grow by less than 3 percent this year, central bank board member Ana Fernanda Maiguashca said on Thursday, warning that a wider current account deficit makes it tougher to try to stimulate growth by cutting interest rates.
The bank’s official estimate for economic growth this year is 3.2 percent, while the government sees 3.6 percent expansion.
Maiguashca’s estimate is in line with that of fellow member of the bank’s seven-member board, Carlos Gustavo Cano, and with the forecasts of a number of economists, some of whom see growth as low as 2.5 percent in 2015, hit by a fall in the global price of oil, Colombia’s major export.
Colombia’s economy, Latin America’s fourth biggest, grew by 4.6 percent last year.
Its potential growth rate this year is between 4 percent and 4.3 percent, Maiguashca, speaking at an economic forum in Bogota, said. That is well below the 4.8 percent potential of last year.
The central bank has held borrowing costs steady at 4.5 percent for 10 straight months even as growth in the economy has slowed. That is higher than the benchmark rates in Mexico, Chile, Peru and Brazil.
Maiguashca said the bank is limited in its monetary policy options by a widening current account deficit. The deficit rose to 7 percent of gross domestic product in the first quarter from 4.6 percent in the same period a year earlier.
“Without that (limitation) on the table, the bank could cut the interest rate and allow a smoother transition to new (economic) conditions,” Maiguashca said.
Lowering interest rates often pushes capital flows toward countries where yields are higher, which could increase the current account deficit. (Reporting by Nelson Bocanegra; Writing by Helen Murphy; Editing by Peter Galloway)