Last week spoke to them of the long-term vision that the Colombian alvaro Uribe’s Government is showing when there was the news that Colombia was making the supply of electricity until 2018, to have tendered the construction of power plants, to increase generating capacity by 3,500 megawatts. And while you enjoy a good pace of growth with a rate expected for 2008 from 5.5%, there is an issue that concerns not because of its implications in themselves but because of the ramifications that has. And that problem is the inflationary theme. While inflation is concerned, the fact that obligates a restrictive monetary policy, is concerned even more. In fact, last Friday, the Bank of the Republic, decided to keep its benchmark rate unchanged at 9.75%, a high level without a doubt. But the market already discounted rate was at least going to maintain stable, while some had opted to increase it by a quarter point.

As reflected in one Note from the Colombian site la-republica.com.co, the fact that the Bank of the Republic has maintained rates, for some analysts is a positive signal that inflationary pressures are calming while for others is a sign of weakness of the Monetary Authority before inflation which will cause inflation expectations to increase future, forcing the increase in the benchmark rate.Although the existing differential between the rate of reference of the Banco de la Republica and the Fed is high, the same impact has not generated from the outside through the entry of speculative capital that could have affected the exchange rate. However, this differential rates, to be tapped by the Colombians themselves entering foreign currency from abroad, has had an impact on the price of the Colombian peso. The truth is that expectations on the future evolution of the reference rate, force the Colombian peso toward appreciation and this impacts on the competitiveness of the economy.