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Colombian central bank raises 2019 growth forecast, keeps rate steady

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Colombian central bank raises 2019 growth forecast, keeps rate steady

Colombia's central bank raised its 2019 forecast for domestic GDP growth, bringing it closer to the government's estimate, while keeping its benchmark interest rate steady at 4.25%.

New information on economic activity prompted Banco de la República to revise its growth forecast for this year to 3.2% from 3.0%, closer to the government's projection of 3.6%.

"The spare capacity of the economy is expected to decline gradually over the policy horizon," the bank said, adding that headline inflation fell to 3.75% in August from 3.79% in the previous month while core inflation indicators continue to stand at around 3.0%.

"Supply shocks are expected to begin fading by the end of 2019, and inflation is expected to resume its convergence to the target, as reflected by market expectations," it said.

"The economy is rebounding, it is rebounding better than what people think," Reuters quoted Finance Minister Alberto Carrasquilla, who represents the government on the central bank's board, as saying.

Meanwhile, board chief Juan Jose Echavarria said the benchmark rate would likely remain at its current level for "a few months more."