Colombia interest rate rises close to their end – policymaker
2022.08.19 00:21
FILE PHOTO: General view of Colombia’s central bank in Bogota, Colombia October 9, 2019. REUTERS/Luisa Gonzalez/File Photo
By Nelson Bocanegra
BOGOTA (Reuters) – An expected slowing of Colombia’s economic growth and more gradual rise in inflation suggest a lesser need for interest rate hikes as rates get closer to peaking, central bank board member Roberto Steiner said on Thursday.
The bank’s board has raised the benchmark interest rate by 725 basis points since September, taking it to 9%, the highest since February 2009. Policymakers accelerated rate rises in June and July with 150 basis point increases, the steepest in 24 years.
Inflation in the Andean country was 10.21% in the 12 months to July, the highest since 2000.
While the Colombian economy expanded a more-than-expected 12.6% in the second quarter and is set to grow 6.9% this year, analysts and policymakers agree there are signs of slowing expansion.
The bank’s technical team has predicted the economy will grow 1.1% in 2023.
“The deceleration of economic activity is evident and will continue to be so next year, the lesser rhythm of growth in some prices, including the price of food, suggests that the need for an aggressive pull-back of monetary stimulus has lessened,” Steiner said on the sidelines of a banking conference in Cartagena.
“So I think we’re closing in on the limit of what the macroeconomic situation says should be the monetary policy stance,” he said.
His comments are aligned with analysts polled in a central bank survey, who said the board would take rates to 10% before the year ends.
“The interest rate today is less than the rate of inflation, but it is a rate that is significantly higher than expectations for inflation on a reasonable timeline,” Steiner added.
The board will next vote on the rate on Sept. 30.
