Colombia's inflation to end 2016 near seven percent

Colombia's inflation rate will end the year at around 7 percent, the upper limit of the central bank's estimate for 2016, despite recent price shocks being "transitory," central bank board member Ana Fernanda Maiguashca said.
"The information that has reached us each time has indicated the presence of new shocks to supply, which continue generating persistent upward pressures on certain prices," Maiguashca said in an interview late on Thursday.
"The shocks are still transitory, but their impact on price formation mechanisms is still present," said Maiguashca, one of seven policymakers on the central bank's board.
The central bank has forecast inflation of between 6 percent and 7 percent this year, well above its long-term target range of 2 percent to 4 percent.
Food prices recently have been driven up by a drought tied to the El Nino weather pattern and a 45-day truckers' strike, while the peso has depreciated 7.8 percent over the last 12 months.
Inflation in July will have been "particularly" high because of the strike, Maiguashca said, adding that it was taken into account when central bank policymakers raised the lending rate by a quarter point to 7.75 percent at the last board meeting.
Maiguashca, a former vice finance minister, said July inflation expectations were not the reason for the rate rise.
"Monetary policy doesn't respond to each inflation figure, but to these shocks that can be persistent for the duration of the second half or longer and which require a stronger monetary policy response," Maiguashca said.
July's inflation figures will be released later on Friday.
Maiguashca said she thought the majority of the shocks have passed, but that policymakers must be attentive to any which could threaten inflation expectations.
A change in monetary policy soon is unlikely, Maiguashca said, contrary to some market views that the bank might start cutting rates in December.
"My position, taking into account that I don't like to predict future discussions, especially in such an uncertain environment, is that given the indexation mechanisms and mechanisms that have increased the persistence of inflation, that we are not close to starting a discussion about when to change our stance."
Colombia's gross domestic product will expand in 2017 to a level similar to the 2.3 percent estimated by the bank for this year, she said.
Economic adjustments have been orderly and must continue to be next year to decrease the current account deficit and move inflation to within the long-term target range, Maiguashca said.