Colombia is on the verge of naming two new central bank board members who are free from outside influence and will give continuity to the nation’s monetary policy, Finance Minister Mauricio Cardenas said.
“The president will name, very soon, two board members of the central bank, two members who you’ll see are independent people, with good academic credentials,” Cardenas told students yesterday in Santander province. The nominations will help “maintain the conduct of monetary policy that we’ve had in recent years,” he said.
President Juan Manuel Santos must appoint replacements for outgoing co-directors Fernando Tenjo and Juan Jose Echavarria, who left the central bank after its January policy meeting. Some Colombian analysts, including Tatiana Diaz, a strategist at local brokerage Casa de Bolsa, said that the changes in the board could result in a central bank with views that are more in line with government’s, which would pursue a more “relaxed” monetary policy to boost growth.
Policy makers will cut the benchmark interest rate a quarter point for the sixth time since June at their Feb. 22 board meeting, to 3.75 percent, according to all 5 analysts surveyed by Bloomberg, after Central Bank Governor Jose Dario Uribe said last week that he seeks faster inflation and growth.
Annual inflation eased to 2 percent in January, the slowest pace since April 2010, from 2.44 percent in December. Uribe said Feb. 8 that the central bank doesn’t want inflation to remain this low, and seeks to get the rate back to the midpoint of its target range. Colombia targets inflation of 3 percent, plus or minus one percentage point.
Industrial output fell 4 percent in November from a year earlier, the biggest drop since 2009. Colombia’s “big aspiration” is a weaker currency to help its exporters, Cardenas said. An “avalanche” of cheap goods from China, as well as subsidized or price-controlled goods from Venezuela, are also hurting Colombia’s manufacturers, Cardenas said.
The peso has strengthened 26 percent since the start of 2009, the biggest gainer among 25 emerging market currencies tracked by Bloomberg after the Chilean peso. The peso strengthened 0.1 percent to 1778.00 per dollar at 8:18 a.m. in Bogota.
Colombia’s record levels of investment can allow it to become a developed nation by 2023, Cardenas said.