Santos Says Colombia GDP May Be ‘Too Fast,’ Backs Bank Vote

Colombia’s economy could be growing “too fast” and the central bank may have been right in disregarding his call to pause by raising rates at its meeting last week, President Juan Manuel Santos said.

Santos, said last week’s retail sales report, which showed a 23.2 percent year on year increase for april, may signal that the economy is expanding too rapidly.

The president on may 31 had urged the central bank to keep the benchmark rate unchanged to safeguard growth.

Policy makers on June 17 raised the rate by a quarter point to 4.25 percent, their fifth straight increase.

Still, Colombia may be reaching the end of its cycle of rate increases, he said.

“What I was saying is ‘be careful,’ let’s not exaggerate because that could really have a negative impact on the economy in the long term,” said Santos, who as finance minister from 2000 to 2002 was a member of the bank’s seven-member policy making board.

“That’s why it’s so important to have an independent central bank.”

Finance Minister Juan Carlos Echeverry, who said first- quarter growth could expand as much as 5.5 percent from the same period a year earlier, on June 17 denied the economy is overheating and said that “it’s warming.

” The government will publish its quarterly growth report on June 23.

Santos also said he expects the U.S. Congress to ratify a free trade agreement with the South American country in August.

The peso rose 0.3 percent to 1,787.40 per U.S. dollar from 1,791.80 on June 17. 

 

That’s its biggest increase since June 14 on a closing basis.

The yield on Colombia’s 10 percent bond due July 2024 was little changed at 7.79 percent, according to Colombia’s stock exchange, at 3:54 p.m. New York time.

The security’s price rose 0.014 centavo to 117.712 centavos per peso.