BOGOTA, Oct 28 (Reuters) – Colombia’s central bank is expected to hike borrowing costs to 11% at its penultimate meeting of the year on Friday, along with policymakers around the world trying to tackle high inflation.
Twelve out of 14 analysts in a recent Reuters poll said the seven-member board will raise the benchmark rate by 100 basis points, while one analyst forecast a 75 basis point hike and another a 50 basis point hike. Continue reading
If the majority forecast comes true, that would be the highest rate since July 2001.
“We expect 100 basis points for the meeting, but we believe another hike in the rate is needed as inflation continues to rise,” said Camilo Perez, chief economist at Banco de Bogota, who forecast another 50-point rate hike for the meeting in March December forecast.
Inflation rose 11.44% year over year through the end of September, nearly four times the bank’s long-term target of 3%. Analysts are predicting that it will take beyond 2023 for the number to return to target.
“This monetary policy cycle is the most aggressive we have seen this century,” Perez said.
The bank has hiked interest rates by 825 basis points since the start of this cycle in September 2021.
Finance Minister Jose Antonio Ocampo, who represents the government on the executive board and sees high inflation as a supply-side problem, said last week it was difficult not to hike interest rates in tandem with other central banks.
Ocampo on Wednesday asked the bank to speak about futures market liquidity at Friday’s meeting. Continue reading
Some analysts have not ruled out possible currency interventions by the bank amid a deep depreciation in the Colombian peso, caused by international uncertainty and market reluctance to the left-wing government’s promises to implement $4 billion tax reform and freeze new oil deals.
During the coronavirus pandemic, the bank authorized dollar auctions via forwards and swaps.
Reporting by Nelson Bocanegra Writing by Julia Symmes Cobb Editing by Alistair Bell
Our standards: The Thomson Reuters Trust Principles.
Comments are closed.