A survey by Anif, an organization chaired by José Ignacio López, He mentions that there is consensus among analysts to extend the relaxation of the monetary policy of the Bank of the Republic.
According to the information provided, Analysts expect the issuer to continue the downward trend that began with the 25 basis point cut in December 2023.
Additionally, the document maintains that the interventions of the National government in favor of a more accelerated reduction of the monetary policy rate, may be associated with inflation and poor economic performance.
This occurs even though May was not a bad month in economic figures, since, Inflation stagnated at 7.16% and in April the economy grew 5.5% annually in its original series, “being the best result of economic activity since October 2021, the first month after the reactivation,” the report maintains.
And he adds, “the market expects a slower decline in inflation compared to previously expected. Analysts expect an annual variation of around 7.02% for June 2024 and close to 5.6% for the end of the year. The Anif projects an inflation of 5.62% at the end of the year and 3.94% at the end of the year, thus returning to the target range.
International context
The organization mentions that the United States Federal Reserve chose to maintain its monetary policy rates between 5.25% and 5.50%. In the North American country, The consumer price index had an annual variation of 3.3% in total inflation and 3.4% in core inflation; However, this is above the Federal Reserve’s target of 2%.
Besides, US real GDP growth of 1.6% during the first quarter of 2024 was below growth in the last quarter of 2023, which was 3.4%. “These two results explained the Federal Reserve’s decision in terms of its interest rate,” they say.
In the case of the European Central Bank, The rate of main financing operations was 4.25%which means a cut since March 2016 “for both the main rate of refinancing operations and the marginal credit rate.”
The marginal credit facility rate was 4.50%; and the deposit facility rate was 3.75%; all previous rates were reduced by 25pn. “For the type of depositit is the first reduction since September 2019,” they say.
Then they add that, “The euro zone economy grew 0.3% in the first quarter of 2024, after registering contractions of 0.1% in the previous two quarters“.
Conclusions
Finally, the Anif mentions that, “The surveyed entities are expecting an interest rate between 8% and 9% for the end of 2024“.
Also, they affirm that inflation will continue to decline and that in 2024 “there is still room to continue decreases in the interest rate, which could give a boost to the economy“.
