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Both Latin American countries increased their reference rates by 25 basis points, bringing the cost of money to historical figures. Although in Colombia the rate of interest rate rises has slowed, inflation has not subsided yet. Meanwhile, in Mexico, inflation is stable, but not close to the government’s goal.
The second and fifth largest economies in Latin America could have defined the path of the region’s central banks on Thursday. Both opted to increase interest rates at a time when the great powers are on the same path.
In the case of Colombia, the increase was much lower than the records of previous months, when the increases reached 75 and 100 basis points. However, although there was a slowdown in the rate increase, with this Thursday, Colombia once again exceeded the historical figure it reached in September, as it now reached 13%.
With this, Colombian officials not only expect inflation to drop, their goal is to be able to place the Consumer Price Index (CPI) below two figures and that people’s consumption can moderate in the coming months.
“If the month of March already begins to see a reduction in the inflation rate, it is possible that we have already reached the ceiling,” said Finance Minister José Antonio Ocampo.
Since July 2022, annual inflation in Colombia has had an upward path that hasn’t stopped Recently, the International Monetary Fund (IMF) congratulated the government of Gustavo Petro for the positive economic outlook that awaits the South American country, but was insistent that it should maintain a strict monetary policy in order to reach its inflation targets.
“It is clear that the interest rate is in a contractive terrain that responds to the fact that inflation is well above what it should be, we are very committed to lowering inflation again at the end of next year,” explained Leonardo Villar, manager of the Bank of the Republic of Colombia.
Mexico is optimistic with its inflation rate
The panorama of the second largest economy in Latin America is very different from that of Colombia, because although the North American country boasts one of the lowest inflation rates in the region —with 7.62% interannual in February— His objective is much more ambitious and he hopes that the high cost of money will dissuade Mexicans from making purchases and thus can reduce his CPI.
“With this action, the rate of increases is reduced and the monetary policy stance adjusts to the trajectory required for inflation to converge to its target of 3% within the forecast horizon,” Banco de México reported in a release.
However, with the small increase in interest rates this Thursday, Mexico reached a historic figure, since in the last 15 years the country had not seen such high interest rates.
With EFE and local media
