May 27th, 2008
Colombian Bonds Gain As Central Bank Signals Growth Concerns
Colombia’s peso bonds rose the most in three weeks after central bankers signaled they’re concerned about an economic slowdown, fueling speculation they may hold off from raising interest rates in coming months.
The central bank left the benchmark overnight rate at a six-year high of 9.75 percent today and said in a statement after the meeting that more information is needed to “determine the risks of a lower pace of growth on the economy.”
Policy makers “have dropped their hawkish tone and are now indicating they are somewhat worried about signs the economy is slowing,” said German Verdugo, head analyst at Bogota-based brokerage Correval SA. “Under this scenario they will need to leave rates unchanged.”
The yield on Colombia’s benchmark 11 percent bonds due July 2020 fell 8 basis points, or 0.08 percentage point, to 11.24 percent at 1:55 p.m. in New York, according to Colombia’s stock exchange. The bonds’ price advanced the most since April 30, rising 0.511 centavo to 98.364 centavos per peso.
Thirty-two of 41 economists surveyed by Bloomberg forecast the bank would leave the benchmark rate unchanged today. Nine predicted a quarter-percentage point increase to 10 percent.
While some economists expected central bankers to raise rates to stem inflation, President Alvaro Uribe called on them this week to cut rates after retail sales and industrial output reports signaled the economy is slowing.
Tags: 511, Bank, basis point, basis points, benchmark, benchmark rate, bogota, bonds, brokerage, centavo, centavos, economic slowdown, economist, economists, economy policy, growth concerns, head analyst, inflation, interest rate, interest rates, overnight rate, percentage point, percentage point increase, retail sales, risk, s central, signals, slowdown, speculation, stock exchange