The Bank of the Republic decided to increase 100 basis points the interest rate, with a majority in favor of 5 to 2 among the members of the board of directors.
Thus, the interest rate reaches 5% (it had been 4% in January).
(See: Colombia won the award for the Green Bond of the year 2022).
Banrep also reported that 2 board members voted to increase rates by 150 basis points.
Among the reasons for the increase, the issuer took into account that the “Total inflation continued its upward trend and registered an annual variation of 8.01% in February, within which the food category stands out, with an annual increase of 23.3%. Inflation without food or regulated items increased from 2.49% in December 2021 to 4.11% per year in February“.
It was also considered the Russian Invasion Of Ukraine, which could intensify bullish pressures on the international prices of some agricultural goods and inputs, energy and oil.
(See: 62% of Colombian households can buy fewer basic goods).
“In this context, the different measures of inflation expectations have continued to rise. In the case of economic analysts, the monthly survey of the Banco de la República showed that they expect a total inflation of 6.4% for 2022 and 3.8% for 2023“, he added.
Banrep also highlighted that a good dynamism of economic activity andn these first months of 2022.
He highlighted, for example, that “the Economic Monitoring Indicator (ISE) for January indicated an annual growth of 7.8, which the monthly survey of Industry and Commerce showed that manufacturing activity presented an annual growth of 15.1% in January and real sales of commerce retail increased by 20.9% art, and that the unemployment rate fell from 15.1% in February 2021 to 12.9% in February 2022“.
(See: Banco de la República, with losses in January).
The issuer reiterated that it is committed to the gradual return to an inflation of 3% per year, “for which it will continue to make the necessary decisions“.
Finally, he said that the Bank’s technical team revised upwards its growth forecast for 2022 from 4.3% to 4.7%, which “implies that excess productive capacity would continue to decline at a faster rate than expected“.
(See: Inflation, elections and rates, challenges of 2022 according to Corficolombiana).
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