Banrep increases the interest rate by 150 basis points to 9%

The Banco de la República raised interest rates by 150 basis points, reaching 9%, This was announced by Leonardo Villar, manager of the monetary authority. This time, six members voted in favor of this decision and one director voted for an increase of 100 basis points.

(Will Banrep intervene in the foreign exchange market due to the rise in the dollar?).

In its policy discussion, the Bank’s Board of Directors took into account that the annual inflation rate registered a new increase, going from 9.1% in May to 9.7% in June. And that basic inflation without food or regulated items increased from 5.9% to 6.1% between these same months.

In addition, he contemplated that inflation expectations continue to rise. “The monthly survey of the Banco de la República to economic analysts showed that between June and July the inflation expectation for 2022 increased from 8.6% to 9.2%, and for 2023 from 4.7% to 5.2% , according to the median of the sample“, indicated the Banrep.

According to the agency, excess demand remains, with one toeconomic activity that remains strong. Therefore, the technical team revised upwards the growth forecast for 2022 from 6.3% to 6.9%.

In fact, organizations, such as the International Monetary Fund (IMF), also improved that projection for the country, indicating that its GDP would grow this year by 6.3 percent, from the 5.8 percent forecast last April.

Finally, for this decision, Banrep also considered that world inflation has continued to rise and has become more persistent, and, at the same time, Fears of a global recession have arisen, generating great volatility in financial markets.

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