Colombia’s Bond Yields Hold at One-Month Low on CPI Outlook

Yields on Colombia’s peso bonds held at a one-month low on bets slowing global growth will curb inflation in the South American nation.

The yield on the country’s 11.25 percent peso-denominated debt due in october 2.018 was little changed at 6.59 percent, according to the central bank. 

That’s the lowest level on a closing basis since may 8. colombian markets were closed yesterday for a holiday.

Colombia’s central bank cited cooling demand, the deepening European debt crisis and cheaper oil in its decision to leave the overnight lending rate unchanged last month at 5.25 percent, according to June 8 minutes of the meeting. 

While keeping a forecast for expansion this year of about 5 percent, policy makers said the increased risks of a Greek exit from the euro area and a “strong recession” in Europe may damp growth.

“Slower growth abroad will lead to less inflation pressures locally and that’s what the market is betting on,” said Jorge Cardozo, an analyst at Bogotá brokerage firm.

Annual inflation accelerated to 3.44 percent last month from 3.43 percent in April. 

Inflation will likely end this year at about 3 percent, the midpoint of the monetary authority’s target, central bank chief José Dario Uribe has said.

Colombia’s peso declined 0.1 percent to 1,777.75 per U.S. dollar.