The Board of Directors of the Bank of the Republic decided to lower its interest rate by another 50 basis points, leaving it at 11.25%.
According to the manager of the Issuer, Leonardo Villar, Four directors voted in favor of the decision and two voted in favor of a 75 basis point reduction.
In its policy discussion, the Banrep Board of Directors took into account aspects such as: Annual inflation in May remained unchanged at 7.2%, while annual food inflation exceeded expectations by increasing from 3% to 4.4%, and non-food inflation fell from 6.4% to 6.1%.
According to Villar, The decision to lower the intervention rate was made, mainly, because “the inflation process is advancing in the direction of the goal,” which is to reach 3% by the first half of 2025.
He added that the survey of economic analysts, carried out in June by the Bank of the Republic, showed a decline from 4.6% to 4.3% in one-year inflation expectations. “Inflation expectations, obtained from the public debt market, remained relatively stable, and although they point to a downward trajectory over time, they are above the goal towards the end of 2025.”
It was also taken into account The 0.9% growth of the Gross Domestic Product (GDP) in the first quarter, which exceeded the estimates of the Banrep technical team, of 0.3%.
The manager pointed out that the risk premiums for the country and the exchange rate of the peso against the dollar have increased in a context in which international financial conditions remain restrictive. However, he said, Indicators for the second quarter suggest that the Colombian economy has continued its recovery path.
“With the decision adopted today, monetary policy maintains a stance in line with the objective of driving inflation to its 2025 goal. while providing a new impetus to the recovery of economic growth. The board of directors reiterates that future decisions will depend on the new information available,” Villar pointed out.
