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BOGOTA, Nov 4 (Reuters) - Colombia’s gross domestic product will grow between 1 percent and 3 percent in 2017 with 2 percent growth being most likely, as the country grapples with slowing economic expansion, the central bank said on Friday.
The bank’s technical team estimates the economy will expand between 1.5 percent and 2.5 percent this year.
“We know the economy has lost energy, that spending is growing less and that some businesses have excess capacity,” central bank chief Jose Dario Uribe said during a presentation of the banks’ quarterly inflation report.
Policymakers raised the benchmark interest rate by 325 basis points over a year before holding the rate at 7.75 percent for three months running to control high inflation even amid the economic slowdown.
Colombia’s economy grew 3.1 percent in 2015.
Economic deceleration is important if inflation, which totaled 7.27 percent in the 12 months through September, is to fall to within the bank’s long-term 2 percent to 4 percent target range, Uribe said.
But slowing inflation during the last three months is not enough for the bank to start consider lowering the interest rate, Uribe said.
“The fact that inflation is being reduced is not sufficient for a reduction in rates,” he said.
Uribe said the moment for rate cuts will come when “there’s clear evidence that inflation is going to converge toward 3 percent, which is the goal, and that you believe us that it’s going to converge to 3 percent.”
The bank estimates that inflation will end 2016 at 6.1 percent, which would make this the second straight year the figure has been above the target range. (Reporting by Nelson Bocanegra and Julia Symmes Cobb; Editing by Phil Berlowitz and Meredith Mazzilli)