Colombia | Banco de la República raised its monetary policy rate by 25 bp to 13.0%

At its March meeting, Banco de la República increased the monetary policy rate by 25 basis points to 13.0%. The vote was unanimous.

Key points

Key points:
Decision: the Board unanimously increased the monetary policy rate by 25bp to 13.0%. The first point mentioned in the press release, when listing the elements taken into account to make the decision, is that inflation is easing.
Inflation: The statement highlighted that the inflation rate is approaching its ceiling, from which the expected decrease for 2023 would start taking place. Because of that, according to the Governor, the March meeting rate increase is much lower than previous meetings increases.
Activity: economic activity continues to be characterized by a significant deceleration. Despite this, the staff increased its 2023 growth forecast from 0.2% to 0.8%, partly explained by the lower growth in 2022 compared to that estimated by Banco de la República.
Our view: the board's decision to raise 25bp, less than in the most recent meetings, and the message of the statement and press conference, are an additional signal that the end of the Banco de la República's rate hike cycle is near.