Colombia had a long period of loosely structured discretion producing moderate (20-30%) inflation before getting more serious about price stability and then successfully adopting inflation targeting in 2001.
|Years||Targets and attainment||Classification|
|1974-2000||frequent and small adjustments of exchange rate versus USD, with focus mainly on competitiveness, some multiple currency practices; some but not all financial assets index-linked; monetary policy concerned with growth and inflation (mostly 20-30%), but also in some periods with improving operation of financial system; main monetary instruments are reserve requirements, rediscount facilities, interest rates and in some periods OMOs; intermittent financial reforms, including abolition of interest rate ceilings 1980; varying fiscal deficits more or less financed by central bank; from mid-1980s more sustained financial liberalisation, with shift of emphasis from reserve requirements and forced investments (loan portfolio requirements on banks) to market-based instruments, especially OMOs, from late 1980s, plus moves to raise competition and efficiency in financial system; central bank becomes less dominant in more liberalised forex market 1991; rise in central bank independence 1992; 1993-98 failed attempts at targeting M1 then monetary base, together with real exchange rate target, plus inflation target; 1994 switch from previous crawling peg to crawling band (width 14%), band depreciated 9% September 1997 and 9% June 1999; peso floated September 1999; preparations for formal inflation targeting||loosely structured discretion LSD|
|2001-09||formal inflation targets with narrow (1%) range declining over time, met or nearly met, except overshoot 2008 and (of raised target) undershoot 2009 with inflation expectations partly outside target range; emphasis on (fan chart) inflation forecasts, with repo rate as key policy rate; forex intervention via options, in principle for smoothing or reserve adjustment only and subject to rules; some use of capital controls 2007-8||full converging inflation targeting FCIT|
|2010-17||stationary inflation targets (2% range) met except for oil-price-plus-depreciation-induced overshoots 2015, when inflation expectations remain broadly within target band, and 2016, when they exceed the band by no more than 1%||full inflation targeting FIT|
Selected IMF references: RED 1975 pp55-65, 67-8; RED 1978 p24-30; SR 1978 pp1-5; RED 1980 pp24, 35, 61-3, 69-72; RED 1982 pp30, 35-6; SR 1982 pp6, 9-11; RED 1983 pp31, 40-2; RED 1991 pp23-4, 32-3, 40-1; RED 1992 pp25-38, 41-3; SR 1992 pp4-5, 9-11; RED 1993 pp29-31; RED 1994 pp5-7; RED 1996 p7; RED 1997 pp10-11, 17, 24; SR 1997 p17; SISA 1998 pp10-12; SR 1998 pp8, 11-13, 18-19; SR 1999 pp8, 10, 16-17, 27; SISA 2001 pp36-46; SR 2001 pp17-19; SR 2002 pp10-11; Third Review under Standby Arrangement June 2004 p6; SR 2005 pp11, 22; SI 2006 pp21-4; SR 2006 pp19-20; SR 2007 pp7, 22-2, 24; SR 2011 pp10; SI 2016 p41; SR 2019 p26.
Other references: Banco de la República, Inflation Report, December 2009 p35, and June 2018 p73.
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