By Nelson Bocanegra and Carlos Vargas
BOGOTA (Reuters) – The board of directors of Colombia’s central bank raised the benchmark interest rate through 10 fundamental issues to 10% on Thursday as inflationary pressures and domestic consumption remain physically powerful and central banks around the world raise rates.
The board was divided on how to raise the rate, with six lawmakers supporting the hundred-basis-point increase and one voting by 50 basis points.
The bank raised its 2022 expansion estimate to 7. 8 from 6. 9Array, but lowered the forecast for next year to 0. 7 from 1. 1 previously.
The fight against inflation is the most sensible priority, Finance Minister Jose Antonio Ocampo, who represents the government on the board, said at a press conference. “We expect this series of decisions to have an effect in terms of reducing inflation. “
Eight of the 17 analysts in a Reuters poll last week expected the bank to raise loan prices through a hundred foundation issues, while the rest expected larger increases of 125 foundation issues and 150 foundation issues.
“Monetary policy in developed countries is tighter than expected, resulting in a deterioration of external monetary situations and a significant depreciation of the peso and other currencies,” the board said in a statement. “Fears of a global recession have increased, leading to declines in commodity prices. “
“The speed of economic activity remained buoyant in the current quarter. Based on this, the technical team raised the gross domestic product expansion forecast for 2022 from 6. 9 to 7. 8 Array,” he added.
The central bank assembly followed recent rate hikes through its peers in the US. The U. S. , Britain, Switzerland and Taiwan, among others, as policymakers struggle with rising inflation and recessions in some countries.
Analysts have frequently raised their inflation forecasts for Colombia. If Reuters poll expectations are met, annual inflation will be 11. 25% in the 12 months to September, nearly 4 times the bank’s long-term target of 3%.
Inflationary pressures have not abated despite increases of 825 base issues in the benchmark interest rate over the past year.
Analysts surveyed predicted politicians would push the rate to 11% before the end of the year.
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