After revealing the new figure of monetary policy interest rate (10.25%)he general manager of the Bank of the Republic, Leonardo Villarand the Minister of Finance and Public Credit, Ricardo Bonillathey talked about what they expect regarding the inflation of the country.
Bonilla, who has been one of the main motivators for the intervention rate to have more aggressive reductions (75 basis points), explained that, although this figure has not stopped falling, It still does not match the rate at which inflation does.
(Continue reading: Private school tuition prices increase by 2025: this will be the increase).
“Inflation has dropped 722 points, while the intervention rate has only dropped 300 points. This leaves a margin that needs to be reviewed in terms of rates.“, he expressed.
The Issuer’s manager complemented by saying that it is true that the current monetary policy is contractionistdespite the fact that interest rates fall at a slower rate than the CPI, still one of the highest in the region.
Ricardo Bonilla, Minister of Finance and Public Credit
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“Monetary policy today is contractionary and continues to be so despite a strong reduction in interest rates, because inflation today is at high levels despite the strong reduction that has occurred since April of last year. Inflation, if we except Argentina and Venezuela, continues to be the highest among the medium and large countries in the region“said Villar.
(Further: The usury rate has been falling for 17 months, remaining at 28.17%).
The Minister of Finance also mentioned that on the Banrep Board of Directors There is fear about what could happen with the inflation data for Septembertaking into account the trucker strike and its effects on food prices, as well as the new agreed increase for the gallon of ACPM.
“The doubt of the majority of the members of the Bank’s board is in terms of the result of inflation in the month of September. Today it is still an expectation. This means that the month of September should continue the downward path of inflation, as expected, but some are afraid of the impact of the truck strike days and the adjustment in the price of diesel.“Bonilla explained.
Leonardo Villar, general manager of the Bank of the Republic
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Leonardo Villar also mentioned that, despite the fact that the rate of fall in inflation is not yet equal to that of the monetary policy interest rate, Yes, it has been important for the CPI to continue falling.
“In this sense, it has been seen necessary to maintain a contractionary policy that leads to the reduction of inflation; policy that has been effective in achieving this reduction in inflation. However, I must also highlight that the interest rate has been falling since the end of last year, at first at a rate of 25 basis points for each meeting and then at a higher rate of 50 basis points for each meeting, and this reduction has helped a significant recovery of the economy“Villar pointed out.
Can inflation rise again?
Stop the scenario of a rise in the CPI in the country, the manager of the Bank of the Republic insisted that There is confidence that inflation will reach the levels expected by the Government by the end of 2025.
(We recommend: Government would have to reduce spending by at least 13% to avoid exceeding the fiscal rule this year).
“The interest rate was reduced significantly and it was reduced because there is confidence that inflation is falling and will continue to fall and that everything seems to indicate that inflation will reach the target at the end of next year and will be, most likely, from the middle of next year within the admissible range for that inflation in accordance with the goals“, said.
However, he did not ignore that there is a possibility that this indicator could rise due to the little effect that the reduction of interest rates in the United States had on country risk marginsnot only in Colombia, but in all Latin American economies.
Inflation
EFE
“Of course there are risks, and one of these is the risk associated with the fact that despite the fact that the United States lowered the interest rate significantly and that, in principle, it would be expected to generate a reduction in the risk margins of countries, it did not manifest itself neither for Colombia nor for the other countries of Latin America and other economies in a reduction in the risk premiums of our economies. Risk premiums increased in this context“he explained.
And he added: “The greater appetite for risk that the lower interest rate in the United States could have generated was offset, in part, by the geopolitical situation, in part it could have been offset because it was directed towards risky assets within the United States itself, but it was not manifested in a reduction of risk premiums for Latin American countries“.
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