Analysts expect interest rate hike of 100 basis points

Analysts expect interest rate hike of 100 basis points

Analysts’ forecasts of the decision to be passed by Banco de la República’s board of directors at its Thursday meeting point to a rate hike of between 100 and 150 basis points.

This would take the reference rate from 9% to 10% or 10.5%. An increase of 150 basis points was implemented at the July board meeting.

The increase in the rate of the Banco de la República is part of monetary policy aimed at controlling the rise in inflation, which stood at 10.8% per annum in August this year.

Fedesarrollo’s Financial Opinion Survey (EOF) shows that 62.9% of analysts say interest rates will rise to 10%, while 37.1% expect it to rise to 10.5%.

With this rate, the analysts’ projection is 37.1% that the interest rate will close at more than 11% this year, and for 34.3% it will reach 11%.

In addition, inflation expectations for September are 11.20% and 11.18% for the end of the year.

For its part, Bancolombia’s Economic, Sector and Market Research Directorate expects the 150 basis points increase in the reference rate adopted in the two previous sessions to be repeated and to close the month at 10.5%.

It indicates that the upside surprises in the recent CPI reports and the continued rise in expectations make the inflation situation very worrying.

“It is the first meeting that the Minister of Finance, José Antonio Ocampo, will chair on behalf of the government of Gustavo Petro, during which monetary policy decisions will be made, the events in terms of prices and the deterioration of global conditions that have taken place in weeks couldn’t be more challenging,” the report said.

He points out that the events that have occurred since June are consistent with the continued accelerated pace of monetary policy adjustments.

Source: El heraldo