As planned, the board of directors of the bank of the republic At its first meeting in 2023, it will prolong a new increase in its intervention rate, number 12 in series, and will take it to 12.75 percent, a level that has not been observed since November 6, 1999.

The new adjustment in the reference rate of the Colombian market was in line with what was expected by the majority of market analysts consulted by the bank itself and by the economic studies center Fedevelopment, although that majority pointed to 100 basis points and not the 75 of the adjustment adopted this Friday.

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Leonardo Villar, manager of the issuing bankHe said that this smaller increase, of 75 basic points, is a sign that the entity is already reaching the level of convergence in which the rate will have an effect on inflation, but he did not rule out that it is the end of the interest rate hike, to which are always attentive to the new information that is had on the evolution of the economy.

«With the decision adopted in today’s session, monetary policy is close to the position required to induce in the medium term a convergence of inflation towards its target of 3 percent. The successive decisions adopted by the Board arose from the new information available,» the bank canceled in its usual statement.

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The rate adjustment, the first of this 2023, was due to the fact that inflation in December continued to rise to 13.12 percent, but also because «inflation expectations (of market analysts) increased in the last month,» the manager said.

According to Alejandro Reyes, BBVA Research’s chief economist for Colombia, the board’s decision to increase 75 basis points, less than what was done in the most recent meetings, and the message in the statement and the press conference, are signs that they are paying the ground toward the end of the Issuer’s rate hike cycle.

«Although they do not end the cycle, they are unequivocal signs that they are close to their terminal rate, which at BBVA Research we estimate at 13 percent (with an increase of 25 basis points at the March meeting,» says the analyst.

And it also highlights that greater focus is beginning to be placed on activity topics that will be very relevant in view of the start of the bearish cycle.

«The comment about the high uncertainty about the data at the beginning of the year in inflation seeks to separate, at least a little, the decisions of the Board with the specific result of inflation, this corroborates our vision that we are close to the end of the upward cycle in rates,» Reyes pointed out.