I hope Minister Ávila returns to the board, or else the President must appoint an 'ad hoc' one
Leonardo Villar, manager of the Bank of the Republic, at the end of the board meeting on March 31, 2026. Photo: Courtesy Bank of the Republic
TL;DR
- The Bank of the Republic's board raised the intervention rate by 100 basis points to 11.25%.
- Manager Leonardo Villar asserted that board decisions are made for societal benefit, not private interests, and aim to preserve purchasing power.
- Villar argued that interest rate hikes do not benefit the financial system, as it also incurs higher borrowing costs.
- He described the rate increase as difficult but necessary to curb inflation and prevent validation of high prices.
- Villar expressed concern about the Finance Minister's absence from board meetings, calling it a potential constitutional breach.
- He recalled that board decisions are made by majority vote, with four members voting to raise rates in the recent meeting.
- Villar highlighted the historical success of the Bank of the Republic in lowering inflation since its creation.
- He stated the bank acts counter-cyclically, adjusting policy based on economic needs and inflation levels.
- Villar hopes for a temporary disruption in the relationship between the board and the government, advocating for restored cordial relations with the minister.
- The decision on future intervention rates will depend on new information, with the real interest rate being the nominal rate minus inflation expectations.