Entrepreneurs, bankers and analysts are waiting for the course that interest rates in the Colombian market can take given the proximity of the sixth meeting of the 2023 board of directors of the Banco de la República that will take place next Friday, June 30 and in which a monetary policy decision will be made, after the May break.

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Although high prices have begun to subside -inflation has completed two months of decline- and the government believes that a cut in interest rates from the Colombian central bank could be close, the market analysts considering that the chances for the Banco de la República to make a first rate cut in June are very distant, What’s more, I think the decision will be to keep them at the current level of 12.25 percent.

Something that has its side in the message that Leonardo Villar, manager of the Banco de la República, left at the recent Banking Convention held in Cartagena, where he stated that The entity continues to see inflation at fairly high levels, despite the decreases observed.

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Inflation continues «even at unacceptably high levels, far from the 3 percent goal,» Villar told the bankers gathered at their annual convention, while specifying that It is not convenient to try to fight inflation by intervening in prices and tariffs, since this generates sectoral distortions and proof of this is the experience left by the price of gasoline, since this leads to the fact that these adjustments will have to be made stronger going forward.

For the official, a dollar that is too expensive, as well as the indexation of prices found, are the biggest obstacles for the cost of living of Colombians to fall with the speed that everyone wants.

The sixth meeting of the board of directors of Banco de la República this year will take place next Friday, June 30.

Go down or go up

Ricardo Bonilla, the finance minister, believes that Colombia could begin to ease monetary policy within three months as inflation moderates and the peso stabilizes around its current level.

If the consumer price rises slowly in line with expectations over the next six months, Banco de la República could «easily» cut its interest rate by two percentage points by the end of the year, the official said.

«What is expected is that in this month the rates will stay put and we will carry out a follow-up process for the next two, three months to, towards the month of September, check if the rates can begin to drop,» commented the minister on Wednesday in an interview at Bloomberg’s New York headquarters.

Economists polled by Bloomberg forecast the central bank will end its steepest series of interest rate hikes at its June 30 policy meeting.. Colombia is the latest large, inflation-targeting economy in Latin America to halt monetary tightening, while some smaller economies, such as Uruguay and Costa Rica, have already begun cutting interest rates as growth slows. slowdown in Latin America.

According to the most recent survey on the financial market carried out by the Fedesarrollo economic studies center, analysts expect the intervention rate to remain at 13.25 percent for June and September.

However, a reduction is also anticipated throughout this year, reaching 11.75 percent in December 2023 and 9.5 percent in June 2023.