BOGOTA, Jan 20 (Reuters) – Colombia’s central financial institution board will as soon as once more increase its benchmark rate of interest at its assembly subsequent week on persistent inflation which has endured regardless of indicators of slowing progress, preliminary findings in a Reuters ballot confirmed on Friday.
Eight of 15 analysts surveyed mentioned the seven-member board will improve borrowing prices by 100 foundation factors to 13%, whereas two count on a 75 foundation factors rise to 12.75% and the remaining three count on a half-point uptick to 12.50%.
In any of the three situations the rate of interest can be the best it has been since November 1999.
Regardless of the financial institution’s resolution, it won’t be unanimous, these surveyed mentioned.
“The principal fear for the board would be the persevering with improve in inflation and its estimates, additionally restrictions on international monetary circumstances that are intensifying and, below these circumstances, exterior and financial imbalances characterize an even bigger supply of vulnerability,” mentioned Laura Parra, analyst at monetary agency Corficolombiana.
“Although there are indicators of productive deceleration and fewer motion within the labor market, the steadiness of dangers deserves a better degree of financial restriction,” she added.
Latin America’s fourth largest economic system noticed inflation of 13.12% in 2022, its highest in practically 24 years and greater than 4 occasions the central financial institution’s long-term goal price of three%.
A majority of analysts mentioned the speed rise on Jan. 27 can be the final and that policymakers will then maintain the speed regular earlier than decreasing it towards the top of the yr.
In keeping with median predictions within the ballot, the speed will shut this yr at 11% and subsequent yr at 7%.
“Going ahead we predict the rate of interest might be secure through the first half of the yr, to later start a cycle of cuts as soon as inflation begins to subside,” mentioned David Cubides, head of financial investigation at Alianza brokerage.
Reporting by Nelson Bocanegra; writing by Julia Symmes Cobb; modifying by Jonathan Oatis
Our Requirements: The Thomson Reuters Belief Ideas.
Supply By https://www.reuters.com/markets/rates-bonds/colombia-central-bank-raise-rate-13-2023-01-20/