Now that inflation has begun to drop in Colombia, the Minister of Finance, Ricardo Bonilla, assured that a space is opening up to begin contemplating the possibility of decrease the interest rates of Banco de la Repúblicathat have been rising for more than two and a half years.
The official stated that if it is possible to complete two or four months with a lower inflation rateThe issuer’s board of directors could discuss the possibility of stopping interest rate hikes.
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In addition, in the second half of the year, “once the inflation trend has subsided” it can also be analyzed a possible decrease in interest rateswhich is currently at 13.25 percent, after a rise of 25 basis points in April.
The finance minister specified that this would not happen at the meeting of the board of directors scheduled for June or July, but it would happen in the second half of this year.
“We aspire that this year’s inflation we can close at 9.5 percent. If we close it at 9.5 percent, we have intervention rates that are four points above, which means that there is room for maneuver to start lowering rates,” the minister commented.
(Also read: Inflation subsides in April, but there are still risks due to possible increases)
Minister of Finance, Ricardo Bonilla.
Likewise, I verified that the increase in the interest rates of the Banco de la República it is “a shot in the foot” for the growth of the Colombian economy, especially when high inflation is not due to the demand effect, but rather due to a supply problem. “The supply is not resolved with higher rates, but with higher production,” added Minister Bonilla.
Inflation began to drop in April and is at 12.82 percent. Likewise, food prices have been falling and this trend is expected to continue. However, the looming drought with a possible El Niño phenomenon towards the end of this year may cause increases in the prices of some foods.
