After the most recent Board of Directors, of the Bank of the Republic, there was a group of co -director that asked for a more aggressive cut of interest rates. However, and for having reached a consensus, the cut was defined in 25 points to leave them at 9.25 %.
According to the minutes of that meeting, the co -director who believe is possible a more aggressive cut, ensure that the decision would significantly help a better behavior of the national economy.
According to this group, maintaining a restrictive position of interest rates in Colombia is not consistent with progress that the Colombian economy has had in reduction of inflation, positive economic growth and deficit correction in the current account of the balance of payments.
“In addition, growth is clearly redistributive because it is leveraged in the growth of private consumption as a result of the increase in the minimum wage, the remittances of Colombians abroad and exports of coffee, flowers, bananas and tourism.”
It is read that while inflation is reduced the effect of the monetary policy rate becomes more Contractionist because it implies a greater real interest rate.
“They insisted that there is space for a more significant reduction in the policy interest rate, taking into account a high real interest rate, and the trend of Colombian peso towards appreciation as a consequence of the weakness of the dollar at the international level,” explains the document on expectations for interest rates in Colombia.
They warn that, although inflation projections are located above the goal, inflation expectations do not show a growing trend.
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And, conclude the co -director that you want to lower interest rates in Colombia more than inflation expectations are explained for “a fall from the measures derived from debt markets, and stability in analysts’ surveys.”
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