Published on Friday, September 29, 2023

Colombia | BanRep maintains stable policy rate with split decision

At its September meeting, The Board, in a 5 to 2 split vote, kept the monetary policy rate unchanged at 13.25%. Among the arguments for the decision, the majority group considered that the Economy is still facing high inflation, well above the target set by the Bank.

Key points

  • Key points:
  • The statement highlights that inflation (11.4%) continues to moderate, although in August there was an upward surprise in monthly inflation (0.7% compared to the 0.5% expected by analysts and the Central Bank). Despite the trend, the statement explicitly stated that inflation remains well above the inflation target for both this year and 2024.
  • High-frequency indicators, the release notes, have continued to show a slowdown in economic activity. However, the statement highlights that this moderation is from higher levels than implied by the trend of activity since the pre-pandemic. In other words, the economy is still operating at levels above its potential, arguing that there is still some demand pressure.
  • The Governor emphasized that the moderation of credit is welcomed and desired, especially because in the past it reached levels of expansion that the Issuer considered unsustainable.
  • He emphasized that despite the credit slowdown, the financial system maintains robust solvency levels and the capacity to face this moderation in activity. On the other hand, the Minister emphasized that there are already reductions in the interest rates of credit capture and placement, supported by the decisions of the Financial Supervisor regarding the CFEN.

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