The decision of raise interest rates by 100 basis points to the 11% levelwhich was taken unanimously by all the members of the Issuer’s Board of Directors, seeks to curb annual inflation, which in September stood at 11.4%.
(Tax: this is the VAT for e-commerce like Amazon).
“We hope that the rate hike will help consolidate a very healthy macroeconomic policy and that inflation will begin to fall from this month as problems such as the food issue or the high rates of energy tariffs are overcome”said the Minister of Finance, José Antonio Ocampo, at the press conference after the meeting.
By raising interest rates, the Banco de la República, which expected is to cool down the increase in consumption, which lowers demand and subsequently prices. At the same time, it is an opportunity for savers, since they are currently being offered better rates on products such as term deposit certificates (CDTs).
That yes, the level of 11% is the highest in which the interest rates of the Banco de la República have been found since July 2001, that is to say, that it is increasingly difficult for Colombians to borrow and pay with their credit cards. credit.
(For 7 out of 10 Colombians, oil is needed to overcome poverty).
To make this decision, Banrep’s Board of Directors mainly took into account three factors: inflation that continues to rise, economic activity that remains robust, and recent volatility in financial markets.
“The measures of inflation expectations continued to increase during the last month, moving away from the goal. The Bank’s survey among economic analysts indicates an expected annual inflation of 6.7 percent in 2023, higher than expected one month behind”said Leonardo Villar, manager of the Issuer.
According to Villar, the cost of living in the country continues to rise due to higher cost pressures in food production, high increases in electricity rates, the transfer of the exchange rate to tradable goods and the dynamics of the demand.
(Ecopetrol: Felipe Bayón was endorsed as president of the company).
And he added that among the elements that were analyzed to make the decision to adjust the rate is the worsening of the adverse financial conditions facing the economy caused by global and local factors, which led to a greater depreciation of the peso, even more than in other currencies of the region.