By Nelson Bocanegra
BOGOTÁ, Sep 23 (Reuters) – The Central Bank of Colombia would increase its reference interest rate this month to contain inflation that is above the target, pressured by a dynamism of the economy greater than expected this year, revealed the a Reuters poll Thursday.
In the consultation between 17 analysts, 15 projected that the highest monetary authority would increase the interest rate by 25 basis points to 2% and the remaining two estimated that it would increase it by 50 basis points to 2.25% in their meeting of 30 of September.
If the market expectation is fulfilled, it would be the first increase in the interest rate since July 2016, when the agency raised it by 25 basis points to 7.75%.
The issuing bank has kept the cost of money at a record low of 1.75% since September last year, after a downward cycle in which it cut the rate by a total of 250 basis points to ease the financial cost of households and companies due to the impact of the coronavirus pandemic, which caused an intense contraction of the economy.
The increase in the rate “will be explained both by inflationary pressures, generated mainly by the food component, and by the rebound in productive activity, which would lead the economy to expand to levels above 8%,” he said. Carlos Alberto Velásquez, head of economic studies at the bankers’ union, Asobancaria.
“The expected increase in the interest rate would be in line with the movements made by other Central Banks in the region and with expectations regarding the change in position of the Federal Reserve,” he added.
The start of the upward cycle of the rate would take place after inflation reached 4.44% per year as of last August, exceeding the Central Bank’s long-term target range of between 2 and 4%.
At the same time, analysts raised their economic growth forecast for this year to 8.2% according to the survey’s median, from 6.8% in last month’s survey, which would put more fuel to the increase. of prices.
“Aggregate demand looks robust,” said Wilson Tovar, chief economist at the Stocks and Securities brokerage. “We see healthy dynamics in high-frequency variables such as retail sales, imports and the confidence of the productive sector.”
But much of the economic growth this year would be explained by a lower base of comparison with respect to 2020, when the country contracted by 6.8%.
For next year the GDP would expand by 3.85%, according to the survey.
According to the median of the query, the Central Bank would continue to increase its interest rate during the coming months until it reached 2.50% in December and up to 4% at the end of 2022.
(Report by Nelson Bocanegra. Edited by Luis Jaime Acosta)