Colombia Cuts Key Rate to Record as Virus Ravages Biggest Cities

Colombia cut interest rates for a fifth straight meeting as a return to stricter lockdown measures in the nations biggest cities threatens to prolong the worst slump in more than a century.

The central banks seven-member board lowered the key rate by a quarter point to a record low of 2.25% on Friday in a unanimous decision, Governor Juan Jose Echavarria said. The decision was in line with expectations.

“In these conditions, the balance of risks of monetary policy suggests the appropriateness of giving an additional impulse to the economy,” the bank said in its statement.

The economy is set to contract between 6% and 10% this year, the bank said, from a previous forecast of 2% to 7%.

Colombia is suffering its deepest downturn since records began in 1905, with the world‘s worst-performing stock market so far this year. Until recently, the nation had been relatively unscathed by the virus compared to Chile and Peru, but that’s changing and the number of new infections has been among the worlds highest in recent days.

The rolling 7-day average of virus cases is currently at 8,500, according to the European Centre for Disease Prevention and Control. The country has had about 290,000 confirmed infections, still fewer than Brazil, Mexico, Chile and Peru.

Economists surveyed by the central bank forecast the bank will cut the rate one more time, taking it to 2%. Echavarria has said the board wants to avoid abrupt rate movements that might trigger destabilizing capital outflows.

(Updats to say decision was unanimous in 2nd paragraph)