Colombia central bank board likely to raise borrowing costs to 6%

  div classBodysc17zpet90 cdBBJodivpBy Nelson Bocanegrap

  pBOGOTA Reuters – Colombias central bank board is likely to raise the benchmark interest rate by 100 basis points to 6 at its meeting on Friday, as it continues hikes in response to persistent inflation pressures.pdivdivdiv classBodysc17zpet90 cdBBJodiv

  pSome analysts have not ruled out a sharper raise in borrowing costs to curb inflation – which stood at 8.53 in the 12 months to March, almost triple the 3 central bank target.p

  pFifteen analysts surveyed in a recent Reuters poll agreed the sevenmember board will hike the rate to 6, its highest level since May 2017.p

  pThat increase would bring the total uptick in borrowing costs to 425 basis points since September last year.p

  pBut the board may opt for a sharper rise because there is no interest rate vote in May, some analysts said.p

  p“We expect a decision for 100 basis points as our central scenario, but we havent ruled out a movement of greater magnitude principally because there is no meeting in May,” said Camilo Perez, chief economist at Banco de Bogota.p

  p“If you look back, exactly in the month before there isn‘t a meeting, that’s when the rhythm accelerates,” he added. “It can be interpreted as a type of anticipation or preparation with a larger adjustment ahead of a month without a monetary policy decision.”p

  pThe board raised the rate by 100 points in January, though the majority of the market had expected 75 points, while in March the rise was 100 points, instead of the majority prediction of 150 points. There was no meeting in February.p

  pThe market will also be watching for increases in the bank technical teams projections for inflation, which may come during the press conference following the interest rate vote.p

  pInflation is not expected to return to the targeted 3 level within the next two years, bank board member Roberto Steiner said last week, predicting rate rises will continue.p


  pp Reporting by Nelson Bocanegra Writing by Julia Symmes Cobb, Editing by Alexandra Hudsonp

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