In an announcement that was a surprise for some and was discounted to others, the Board of Directors of the Bank of the Republic decided this Friday – January – keeping the interest rates frozen at 9.5%; level in which it is This reference from the reduction of 25 basic points that was decreed in December last year.
It is striking that once again the majorities of this team of analysts were felt, since five directors voted in favor of this decision, one did for a reduction of 25 basic points and Another for a reduction of 50 points and it is confirmed that caution remains high among these experts.
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Fear of inflation
Although the Board of Directors acknowledges that annual inflation in December was 5.2%, the same level recorded in November and that throughout 2024 showed contractive behaviors in which even the CPI without food or regulated was reduced by 5 , 4% to 5.2%, marked by lower inflation of services; There are still important pressures.
“This process faces challenges associated with a greater annual increase of the Price Price Index, which between October and December went from 1.6% to 5.8% and an increase in the minimum wage that, by including the transport subsidy, exceeded in about 6 percentage points the observed inflation and In 8 points the inflation goal, ”they said.
Diego Guevara, Minister of Finance.
Courtesy – API
Although the decision did not like the Minister of Finance, Diego Guevara, the issuer asked not to ignore that there are also risks in a possible recent rebound in all measures of inflation expectations. The above in the context of uncertainty in the fiscal front and a volatile exchange rate.
“The labor market maintains good records with increases in the occupation and falls of the unemployment rate. The technical team estimates a 2.3% GDP growth for the fourth quarter of 2024, higher than the growths observed in each of the three previous three -month periods. Growth Economic for 2024 is estimated at 1.8% and by 2025 in 2.6%, ”they said in the statement.
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Minhacienda dissent
Given this, the Minhacienda said they will continue to insist and put on the table, the need for the Board to accept a faster rate of the rates and contribute to the reactivation of the economy.
“We as a national government, as the presidency of the Board of Directors we disagree of this decision. I believe that in the end, although some expectations have changed regarding the behavior of inflation, for all agents it is clear that a downward trend will continue. As a national government we will insist on a policy of responsible decrease in the interest rate, ”he said.
The Petro government spokesman closed making it clear that “we hope it is a short pause, which of course we will look responsibly in a responsible way how the external front behaves, but that that continuation will be necessary in a responsible way according to inflation will be necessary to approach its target range, because the interest rate is definitely a fundamental macroeconomic price for investment. ”
Leonardo Villar, manager Banco de la República.
Courtesy – API
Expectation for the new
Taking into account that this will be the last meeting of the Board with the current members, for now the market focuses on detailing as soon as possible the change of macroeconomic positions that would have with the arrival of Laura Moisá and César Giraldo, the co -director appointed by President Gustavo Petro.
Carolina Monzón, manager of Economic Research in Itaú Colombia, focused on the fact that Bank manager, Leonardo Villar, said there are winds against the disinflation process, as anticipated in the increase in prices indicated to the producer (IPP), the Increase in the minimum wage and its effects on transportation subsidy, and a rebound in all inflation expectations measures.
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“While the decision is a surprise, we believe that the door is open For the cuts to continue at the next March meeting, when the Banrep Board will have two new members, which will probably change the position of the Board to a more dovish side. We hope that, at the March meeting, the Banrep Board cut again, and forward, we estimate that the interest rate at the end of the year could be about 8%, ”added this analyst.
One of the economic research teams that had announced a freezing of fees was that of the Bank of Bogotá. There, its director, Camilo Pérez, said that the Bank of the Republic made its arguments clear to maintain caution, although he believes that this position will not last long.
“All this clearly maintains a high -uncertainty scenario for the Central Bank. It is also very important to keep in mind that the changes that are coming at the Central Bank Board will surely also have an incidence in the monetary policy path and I think it is like rearranging the Board panorama thinking about what comes as such, ”he said.
Laura Moisá and César Giraldo, new emitter co -director.
Courtesy – API
It is considered again
According to the regulations of the issuer, its Board of Directors consists of seven members, among which the Minister of Finance, Diego Guevara, and the general manager, Leonardo Villar, who work hand in hand with five other co -director, among which they will be, among which they will be Since March, Laura Moisá and César Giraldo, two economists who for the market can be considered a line near President Petro.
Thus, Alejandro Reyes, main economist of BBVA Research, He explains that although the decision of the Board surprised again the average of analysts, who mostly waiting for a reduction of 25 basic points in the policy rate at this meeting, recently the conditions to support the decision have been given.
“The vote suggests a less accommodating posture even in those who support the reduction of rates. The highest reduction vote was for 50 basic points while in the last meetings it was 75 points. If the conditions that supported this decision are maintained in the coming months, this balance of the vote will make a little more difficult that 50 points or more are observed in the months of March and April, ”he said.
Reyes closed saying that “in the face of the next policy meetings, uncertainty will be increased since the majority vote will be fragmented with the changes in the members that are part of the Board. This makes reading the position of the two new members in the next two months before the new monetary policy meeting is fundamental. ”
