Analysts predict that Colombia’s central bank will cut the benchmark interest rate by 50 basis points at its upcoming meeting, reducing the rate to 9.25%. This would mark a continued effort by the bank to respond to fiscal challenges and inflationary pressures, following a pattern of consecutive cuts.
On Friday, Colombia’s central bank board is anticipated to convene for its final meeting of 2024, during which a consensus among analysts indicates a likely reduction of the benchmark interest rate by 50 basis points. This action would lower the rate to 9.25%, marking the seventh consecutive reduction of the same magnitude. This decision comes in light of ongoing economic uncertainties at both a global and domestic level, alongside fiscal challenges encountered by the government of President Gustavo Petro.
The central bank’s decision to lower interest rates is heavily influenced by recent fiscal dynamics and inflation trends. Colombia is currently facing constraints in public spending and a broader economic environment characterized by soaring inflation, presently at 5.20%, exceeding the bank’s target of 3%. The backdrop includes a failed fiscal reform proposal worth $2.7 billion, a requirement for substantial spending cuts amounting to 40 trillion pesos this year, and 52 trillion pesos next year. In this context, the central bank aims to sustain its restrictive monetary policy while monitoring inflation.
In summary, the anticipated 50 basis point cut by Colombia’s central bank reflects prudent measures in a context of global uncertainty, domestic fiscal challenges, and inflationary pressures. As the bank seeks to navigate these complexities, stakeholders are keenly observing how these adjustments will impact the economic trajectory moving forward into 2025.
Original Source: www.brecorder.com
