Colombia | Banrep raised its monetary policy interest rate by 100 bps

Summary

At its April meeting, Banco de la República increased the monetary policy rate by 100 bps, bringing it to 6.0%. The vote was split, with 4 members in favor of a 100 bp increase and 3 members in favor of a 150 bp increase.

Key points

• Key points:
• With this increase, the Bank maintains the pace of rate tightening reported in January and March. The decision was split, with 4 members favoring a 100 bp increase and the remaining 3 advocating a 150 bp increase.
• Regarding inflation, the statement emphasized the March result of 8.53% and the core result of 4.51% with a clear upward bias associated with risks from the conflict in Ukraine on commodity prices.
• On activity, the Bank makes a small comment in the statement, highlighting that the technical team revised upwards the growth expectation to 5.0% from the previous 4.7%. They maintain the forecast for 2023 at 2.9%.
• On the external front it only highlights the impact of the conflict in Ukraine with a risk of additional inflation pressures and in a single line highlights that the outlook for interest rate hikes in the US has been raised.
• We believe that the Bank will continue to raise its interest rates, possibly in steps of 100bp, in the next meetings (June and July) to bring the rate to 8.0%.

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