While the board of directors of the Bank of the Republic increased by 25 basis points monetary policy interest rate taking it to 13%also announced that it increased its projection for gross domestic product growth to 0.84% this year.
Leonardo Villar, Issuer manager said that the growth outlook was revised upwards as “At the previous meeting it was said that we expected 0.2% for GDP and now it has increased to 0.8%, which is still low”.
The review is motivateddue to data that is better than expected and also because the Dane revised the GDP of 2022 downwards, since it went from 8 to 7.5%. That generates a lower base of comparison and against that same base that generates a greater growth of 2023”.
Villar said that with the decision adopted, monetary policy continues with its objective of bringing inflation towards its target of 3%.
He asserted that inflation expectations are beginning to incorporate these positive news about the recent behavior of inflation. The survey of economic analysts carried out by Banco de la República in March showed that the 12-month inflation expectation fell from 7.7% in January to 7.2% in March.
The Issuer’s board of directors had among its considerations that between January and March the volatility in international markets has been exceptional, due to financial stability problems in the United States and some European countries. The situation added uncertainty, but its effects on Colombia have been limited.
He Minister of Finance, José Antonio Ocampo He highlighted that there has been a drop in the TES rate by three percentage points since October 2022 and that in the midst of a context of rising rates, which shows the confidence that has been generated.
He also mentioned that the drop in microcredit rates and the decision of banks to accompany the Government by lowering rates is positive and that, according to the Board of Directors, is not contrary to monetary policy.
Jonathan Malagón, president of Asobancariasaid that the rate hike “does not compromise the trend that we have seen in the banking sector, which has been anticipating lower interest rates on different products” and saluted the efforts of the central bank to control inflation.
Last Thursday the Financial Supervision certified that the usury rate for consumer credit in April was 47.09%, which implies a rise of 83 basic points per month. Similar to what happened with the Issuer rates, this is the smallest increase in the usury rate in the last year.