Just as the markets and most analysts estimated, the Banco de la República raised 100 basis points (one percentage point) repo interest rate on daily operations with entities and placed it at 11%.
(In context: Banco de la República raised its interest rate to 11%).
The manager of Banco de la República, Leonardo Villar, said at the end of the board of directors in which the decision was made that in the last month the adverse financial conditions facing the economy have worsened, caused by global factors and idiosyncratic factors. “These conditions translated, among others, into a monthly depreciation higher than the averages of other emerging economies,” he said.
He added that annual inflation rose from 10.8% to 11.4% between August and September. The rise in inflation is explained due to additional cost pressures in food production, high increases in electricity ratesthe transfer of the exchange rate to tradable goods, the dynamics of demand and indexation processes at increasing rates of inflation.
(Also: GDP for 2023 faces round of downward revisions.)
Measures of inflation expectations continued to rise in the last month, moving away from the target. The Banco de la República survey among economic analysts indicates a expected annual inflation of 6.7% in 2023, higher than expected a month ago.
Villar said that the growth forecast for the technical team is 7.9% for 2022 and 0.5% for 2023. Despite the expected slowdown, the forecast for the level of activity economy is 12% higher than that observed in 2019.
The manager of the issuer said that the rise is consistent with a convergence of inflation in the medium term to its target of 3%.
The Minister of Finance, José Antonio Ocampo, said that the decision to raise the rate contributes to the decrease in the exchange rate and to consolidate a macroeconomic policy that has had a lot of positive news and looks towards the coming year in a context that means a reduction in inflation and an economic slowdown.
(Also: The tools of the Bank of the Republic to stop the rise of the dollar).
He pointed out that the behavior of the exchange rate was discussed at the meeting of the issuing bank, but it was decided not to make any type of intervention in the dollar market.
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