Published on Friday, December 16, 2022

Colombia | BanRep raised its monetary policy rate to 12.0%. With divided vote

At its December meeting, Banco de la República increased the monetary policy rate by 100 basis points, bringing it to 12.0%. Although the vote was mostly for a 100bp increase, there was one vote for a 125bp increase and another for a 25bp increase.

Key points

  • Key points:
  • The press release mentions that in November annual inflation maintained an upward trend and was higher than expected, reaching 12.5% for total inflation and 8.8% for core inflation (excluding food and administered prices).
  • In addition, the statement mentions that inflation expectations continue to be above target and it emphasizes that this is the case for all horizons. For December 2023, the median of analysts' inflation expectations is 7.5% for total inflation and 7% for core inflation (non-food).
  • Concerns about inflation not only because of the November surprise but also because of inflation expectations make us expect at least an additional 50 bps of rate hikes in early 2023, the final magnitude depending on the behavior of inflation.

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