Traders in the interest rate swap market are lowering bets that the Bank of the Republic will raise its reference rate this month at an extraordinary meeting of monetary politics, after the general manager, Leonard Villar, said that there is no reason to change the established schedule.
(See: The OECD estimates that Colombia’s GDP will grow 5.5% in 2022).
It should be remembered that Colombia holds eight policy meetings during the year: in January, March, April, June, July, September, October and December.
“I see no reason to change” the schedule, Villar said at an event in Bogota on Thursday.
(See: Inflation in Colombia: are there estimates of when it would start to fall?).
“It is important to remember that policy decisions do not affect the inflation figure for the following month. Policy decisions are made and affect demand and inflation over time frames ranging from 6 to 18 months“, he highlighted.
The monetary policy rate of the Banco de la República, currently at 4%, continues to be expansionary, and Banrep seeks to move towards a more neutral rate, since the economy is very close to its potential, Villar said.
Annual inflation accelerated to 6.9% in January, leading to increased bets that the policy committee could raise rates this month in a surprise way.
(See: Banrep: raising interest rates to moderate the country’s growth).
The sender is unlikely to press the “panic button” to raise rates during an extraordinary meeting, Mario Castro, fixed income strategist at Banco Bilbao Vizcaya Argentaria, said in response to written questions.
For his part, the Bank of America analyst, Alexander Muller, said in a note that it expected an interest rate hike of 100 basis points this month and further hikes to a terminal rate of 8%.
BLOOMBERG
