Colombia’s central bank will raise rates to 11%

According to a survey conducted by analysts on Friday, the central bank board of Colombia will likely increase the benchmark interest rate at its meeting the following week, marking the penultimate hike in a cycle intended to combat inflation.

One analyst forecasted a 75 basis point hike, and another predicted a 50 basis point increase, but 12 of the 14 analysts polled said the seven-member board will raise borrowing prices by 100 basis points to 11 percent.

“Observed inflation and the expectations continue to rise, economic activity is showing robust rates of expansion and during the year so far the labour market has closed its gap compared to pre-pandemic levels,” said the recently released report.

Market specialists anticipate that the board will continue making sizable but steady increases to demonstrate their commitment to the medium-term inflation target. September had an inflation rate of 11.44 percent, roughly four times the bank’s long-term 3 percent target. They also noted that the targeted inflation rate won’t be reached until 2023.

Since the beginning of the current cycle in September 2021, the bank has raised the rate by 825 basis points. The bank will likely make its final 50 basis point increase in December.

Jose Antonio Ocampo, the finance minister and the government’s representative on the board, stated at a symposium on Thursday that boosting interest rates achieves “very little or nothing” to address the issue of rising inflation, which is a supply-side issue.

Ocampo conceded that it would be challenging to avoid raising prices in unison with other central banks. “It’s very difficult not to follow international decisions,” he said.