Colombia central bank extends inflation target of 3% to 2022

Colombia’s apex bank has pegged its inflation target for 2022 at 3% on Friday, extending the goal for another year, with a range of between 2% and 4%, even as prices continue to rise amid global economic rebound and supply-chain challenges.

Known as Latin America’s fourth-largest economy, Colombia saw 12-month inflation hit 4.58% in October, a far cry from the goal set by the monetary authority.

Since September the lender has engaged in a upward monetary policy cycle. As part of this, it hiked its benchmark interest rate by 25 basis points, while a 50 basis-point rise in October brought the rate to 2.50%.

Across many nations of the world, inflation has crossed target levels owing to unprecedented changes to market conditions, the bank’s board said in a statement.

“In Colombia these shocks include growth in aggregate demand far greater than anticipated and, on the other hand, the same challenges which have affected supply capacity globally to respond harmonically (to demand),” the board said in a statement.

A recent poll by Reuters revealed that analysts forecast the bank could increase the rate to as much as 4.50% by the end of next year.

The bank indicated earlier in October that it expects inflation to reach 4.9% in 2021 and 3.6% in 2022, as a global trend has put pressure on apex central banks across the globe to adjust liquidity.

Director General of the World Trade Organization Ngozi Okonjo-Iweala stated that global supply chain challenges are expected to be short term. She also added that while the challenges may continue into 2022, they are not expected to run any further.