The board of directors of the Bank of the Republic reported, this Monday, September 30, that it decided, by majority, reduce by 50 basis points (bps) the interest rate in the country, which remained at 10.25%.
(See: Leonardo Villar was re-elected for a new period as manager of the Issuer).
According to the Issuer, Four directors voted in favor of the 50 bps reduction and three voted for a 75 bps reduction.
For the decision, the Banrep board took into account:
– Annual inflation, which was 6.1% in August, below what the market expected. “The downward surprises occurred in the food baskets due to the good performance of the supply and in the regulated baskets due to minor adjustments in some public services. Basic inflation without food or regulated items fell to 5.5%“.
On the topic of inflation, the Issuer also added that “Measures of inflation expectations for 2025 derived from public debt markets fell, while those from analysts remained relatively stable“.
(See: Banrep lowered rates to 10.25%: the details of its decision).
– The Gross Domestic Product (GDP), which registered an annual growth of 1.8% in the second quarter in its seasonally adjusted series. “GDP was driven by domestic demand that grew more than projected, mainly due to the dynamism of private consumption. Although gross fixed capital formation increased, it remains at lower levels than pre-pandemic levels. The economic activity indicators for the third quarter suggest that the economy would have continued to deepen its recovery process“.
– The Fed’s decision, which lowered the interest rate in the United States by 50 bps and there are expectations of additional cuts by the Federal Reserve. However, Banrep explained, despite this, “Risk premiums in Latin America increased and in Colombia they did so to a greater extent. This is linked, among other factors, to the reduction in oil prices and the challenging fiscal situation.“.
(See: Budget 2025: Government says that the amount would be issued by decree and would be $523 billion).
“The decision adopted in this Monday’s session continues to support the recovery of economic growth and maintains the required prudence given the risks that remain regarding the behavior of inflation. The Board of Directors reiterates that future decisions will depend on the new information available“said Leonardo Vilar, the manager of Banrep and who was re-elected for a new four-year period at the head of the entity (it will begin on January 4, 2025).
(See: Petro’s new defense of his reforms: ‘They will help build a more just Colombia’).
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