Although it was a possibility that few bet on, the Banco de la República accelerated the normalization of its monetary policy with an increase of one percentage point (100 basic points), 3 to 4%, the rate of your principal intervention instrument.
The consensus was that the Board of Directors of the Issuer would increase it by 75 basic points (bp) or 0.75 percentage points, but the persistence of inflation, which closed at 5.62% in 2021 and is expected to rise a little more, was one of the reasons for the increase.
The Issuer’s manager, Leonardo Villar, said that the forecast by the technical team was also revised upwards and contemplates that total inflation and basic inflation reach 4.3% and 4.5% in 2022, and are located in 3.4% and 3.6% in 2023 and reaffirmed its GDP growth forecast for 2021 at a rate close to 10%. With this growth, GDP for all of 2021 would exceed that of 2019 and existing excess capacity is about to be closed. For 2022 the forecast would be around 4.3%.
He said that the current account of the balance of payments would close 2021 with a deficit of about 5.7% of GDP. In 2022 this imbalance would begin to moderate towards 4.9% of GDP, in an international financial environment that is hardening due to the acceleration in the normalization of monetary policy in the United States.
The Minister of Finance, José Manuel Restrepo, said that despite the decision to raise 100 bp the rate remains negative and will contribute to the dynamism of the economy so entrepreneurs can turn to credit to maintain their productivity.
Villar assured that “we are in an adjustment process and the magnitude of the support is being reduced and there is still a long way to go” and assured that with the decision, progress is made towards a neutral rate that does not generate neither stimulus nor disincentive and that it should be positive.
THE EXPRESSION OF DUKE
Villar referred to the message that the president Ivan Duke in the sense that the central bank must have “finesse” when raising rates so as not to slow down the economy and assured that this was not a topic of discussion at the meeting.
“The expressions of the President of the Republic are always important for those of us who make public policy decisions. The President expressed in the sentence what the bank does, which is to review the impact of its policies on inflation, productive activity, growth”.
BRIEFCASE
