The next meeting of the Bank of the Republic is approaching and the ghost of rising rates is gaining strength again
Interest rates would remain on the rise for the rest of the year. Photo: Image generated with Artificial Intelligence - ChatGPT
TL;DR
- Economic analysis suggests Colombia's interest rate hikes are not over.
- The increase in the minimum wage impacted inflation expectations, forcing the central bank to act strongly.
- Inflation expectations remain unanchored, with market indicators and surveys showing persistent upward trends.
- February's inflation data showed only a slight moderation, driven by temporary factors, while core inflation accelerated.
- Service sector price variations are a key driver of inflationary pressures, reflecting wage increases.
- Most analysts expect another rate increase at the upcoming central bank meeting.
- The projected rate increase could be between 25 and 100 basis points, with further adjustments expected through 2026.
- The cycle of rate cuts has been postponed due to a lack of convergence in inflation to the target range.
- High interest rates are expected to lead to expensive credit and increased costs for the economy.