The Bank of the Republic completed a dozen interest rate hikes yesterday to try to rein in the inflation and although he said that the end of this contractive monetary policy is near, he also assured that in the March meeting he could make a similar decision again.
(See: Relive the Banrepública press conference on its rate decision).
Issuer’s manager, Leonardo Villar said that the increase of 75 basic points (bps), from 12% to 12.75%, was made taking into account the total inflation of 2022 of 13.12%, the basic inflation –without food or regulated- (9.5%) which continued with their growing trend in December, reaching records higher than those estimated by the technical team and analysts.
(See: Banco de la República increased its interest rates to 12.75%).
He said that the acceleration of inflation was due to upward pressures on the prices of foodsindexing to high inflation rates and the accumulated effects of the depreciation of the peso, among other reasons and in line with this, inflation expectations increased in the last month.
(See: Is the first and last rate hike from the Banco de la República coming up?).
He assured an estimated growth of the gross domestic product of 8.0% for 2022 and “for 2023 the technical team forecasts a growth of 0.2%.”
He mentioned that overall inflation It has fallen due to the adjustment of the monetary policy and the mitigation of supply disturbances on the costs of maritime transport and the international prices of some foods and energy products. In addition, the improvement in the external environment and confidence in Colombia’s fiscal prospects have been reflected in a drop in the exchange rate.
He assured that credit growth has slowed down, which favors a moderation of domestic demand and pressures inflationary in 2023.
indicated that monetary policy “It is close to the position required to induce a convergence of inflation towards its target of 3% in the medium term.”
(See: Bets on rate hikes are divided among economists.)
Juan Pablo Espinosa, Director of Economic ResearchSectoral and Markets Bancolombiasaid that although the decision was below the expectation of 100 bps, the magnitude of the increase remained considerable.
In addition, he considered that the final point of the same will depend to a large extent on the 12-month inflation reaching its peak, which would occur in March.
Espinosa said that the current bullish cycle would end in March, with an increase of 75 bp and anticipated that this rate will reach a terminal level of 13.5%.
For her part, María Claudia Lacouture, President of the Colombian American Chamber of Commerce, AmCham Colombia said the increase “It is consistent with the results of economic growth and the downward trend of the exchange rate. However, it is worth paying attention to the persistent rise in inflation so that consumption and household pockets are not affected, while keeping in mind the forecast of economic slowdown and growth of 0.2% for this year. ”.
The directive said that in addition to the measures to combat the high prices in inputs, goods and services, “It is convenient that signals of confidence, stability and clear rules be sent to investors to avoid a greater impact on income and job creation.”
For his part, Alejandro Reyes, chief economist at BBVA Research, highlighted that greater focus is beginning to be placed on activity issues that will be very relevant in view of the start of the bearish cycle.
Finally, he assured that “the comment about the high uncertainty about the data at the beginning of the year in inflation seeks to separate, at least a little, the decisions of the Board with the specific result of inflation, this corroborates our vision that we are close to the end of the upward cycle in rates”.
LAURA LUCÍA ELEJALDE BECERRA
PORTFOLIO JOURNALIST
