Banco de la República would raise the interest rate to 10%, according to experts

The Board of Directors of Banco de la República will hold its monthly meeting, in which a new decision regarding the intervention rate is expected. On average the market projects an increase of 100 basic points (bps), with which the interest rate would remain at 10%.

(Colombia, among the countries with the least financial inclusion in the world).

This would be the highest rate since the decision made in July 2008 by the Issuer’s board, when it maintained this level for six months before reducing intervention rates again.

In fact, according to the latest survey of expectations by the Banco de la República, which consulted 41 entities including banks, brokerage firms, universities and other institutions, analysts expect the interest rate to rise to 10.0% on average closing of September, and that by the end of the year it stands at 11%.

A similar picture was shown by the Fedesarrollo Financial Opinion Survey (EOF), in which analysts consulted also expect the Issuer’s Board to make a monetary policy decision this Thursday. The analysts consulted by Fedesarrollo consider that the intervention rate will increase to 10.0% at the end of the month. Also, they expect the rate to rise to 11.0% by the end of the year.

It is worth mentioning that in the last rate decision made by Banrep, the board increased the intervention rate by 150 bps, placing it at 9.0%.

(Colombian Stock Exchange and GGGI promote issuance of sustainable bonds).

Although this is the market average expectation, other entities, such as, expect an increase of 150 bps. For Munir Jalil, BTG Pactual’s chief economist for the region, he said that he expects “the Bank to raise its rate by 150 basis points, but we will be surprised if it is a little less”, due to a further deterioration in market conditions.

Another entity that expects interest rates reach 10.5% is Banco Itaú, and Bancolombia is also in this same range. According to the bank, it is expected that this month the increase of 150 bps in the reference rate that was adopted in the two previous sessions will be repeated.

“We anticipate that the decision will be made by majority, since some co-directors would consider it appropriate to moderate the upward movement in the rate,” said the bank’s economic research team, which justified its forecast on the upward surprises in recent price index reports. (CPI) and “the continuous increase in expectations make the inflationary situation very worrying”.

Laura Lucia Becerra Elejalde
BRIEFCASE