The manager of the Banco de la República, Leonardo Villar, assured that, although inflationary pressures have led to important decisions regarding monetary policy, “food inflation is expected to decrease significantly from the second trimester.
(The OECD recommendations to Colombia to improve its economy).
The Issuer’s manager presented his vision within the framework of an event organized by BTG Pactual, where he referred to the impact of the phenomenon in recent months, and that in January it reached 6.94%, above market expectations.
“Uncertainty about inflation has increased, it is no longer known how long-lasting its effects are. And the implication that this has is that when it is perceived that inflation is going to be higher in the future, what begins as pressure on particular sectors begins to be transferred to prices in more sectors and it is observed that a greater number of products that increase their prices above the inflation target”and assured that he assured that for this reason the decision was made to also raise the interest rate by 100 basic points in January.
(January, one of the most difficult months in household spending).
“The period of low rates was no longer what was required for the economy and it was inconvenient for inflation, which began to accelerate. What happened next is that there was important surprises, of increases in inflationbut above all, that the expectations began to be disassociated from the goal”, said Villar.
Faced with new increases, he assured that it is not about take decisions to the race, but that they will be adopted based on the latest information available, but he reiterated that “when expectations begin to detach from the goal, that forces us to react quickly.”
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