When a central bank adjusts its monetary policy ratethis aims to influence the economy at a macroeconomic level. This is because the behavior of this indicator has an effect on the economic growth, employment and inflation of a country.
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In the case of Colombia, The intervention rate of the Bank of the Republic closed 2024 at 9.50%, after the Issuer’s board of directors will make the decision to reduce it by 25 basis points at its last meeting of the year.
Banrep’s determination to remain cautious with the speed of casualties was seen motivated by internal uncertainty and the effects of the international situation. In particular, the rate of decline that inflation has been registering and the upward pressures on the exchange rate were taken into account.
Considering that some of the main banks on the continent continue on the path of cuts, where is Colombia compared to other countries?
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Interest rate
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Interest rates in the region
Starting with the United States, the US Federal Reserve (Fed) launched the ‘scissors’ in its interest rates in the second half of this year. At its most recent meeting, and for the third time, The entity decided to lower the reference rate by a quarter of a point.
So things are, The indicator remained in a range of 4.25% to 4.5%.
It should be remembered that after the eleven increases applied since March 2022 to control inflation, the reference rate has been in a range of 5.25% to 5.5% since July 2023, the highest figure since January 2023. 2001. However, with the US economy stabilizing, The Fed made the decision in September to begin the declines.
Turning to Mexico, the central bank of that country chose to close the year with a cut of 25 basis points that adds to the other three consecutive reductions made throughout 2024. In this way, the interest rate stood at a 10%.
Chile, along those same lines, resolved to reduce the reference interest rate by 0.25 points to 5%thus advancing the process of cuts that began in July of last year.
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Interest rate
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In contrast to the three previous cases, the Central Bank of Brazil approved an increase in the basic interest rate of one percentage point, taking it to 12.25%. The decision occurred in a context in which inflation is rising and doubts regarding the country’s fiscal scenario are increasing.
Argentina, for its part, showed a new reduction in its rates. At the beginning of December, the board of directors of the Central Bank of the Argentine Republic (BCRA) decided to reduce the monetary policy rate from 35% to 32%.
The downward trend that the Argentine Issuer decided to take was motivated by expectations regarding the behavior of inflation.
As for Peru, The central bank chose to keep the official interest rate unchanged awaiting new data on inflation projections and economic activity. In this way, the indicator remained at 5%.
PORTFOLIO
