A 50 Basis Point Colombian Central Bank Rate Hike with Three Dissenters Favoring a Larger Increase

December 17, 2021

Colombia’s monetary policy rate was raised today to 3.0% from 2.5%. This increase followed hikes of 25 basis points in September and 50 bps in October, and it was decided by a thin 4-3 vote where the disagreement pertained to how much to tighten rather than whether to lift the rate again or not. Three of the 7 policymakers preferred a 75-basis point move, which would have exceeded street expectations. Colombian CPI inflation more than tripled from 1.51% last March to 5.26% in November, and core inflation jumped a half percentage point in November alone to 2.54%. Monetary officials have an inflation target of 3.0% that on average will likely be exceeded in both 2021 and 2022 according to a released statement. The country’s current account deficit exceeds 5.0% of GDP, and GDP is expanding close to a double-digit pace than can handle a less accommodative policy stance.

Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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