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MARRAKECH, Oct 14 (Reuters) – Colombian Finance Minister Ricardo Bonilla said on Saturday his ministry was working with the Central Bank to reduce its reference interest rate from 13.25% to 13% at the meeting of October monetary policy, with another reduction before the end of the year.
“The expectation is that the rate in October will move 0.25, and it will move again in December,” the minister told Reuters in an interview on the sidelines of the World Bank and International Monetary Fund meetings in Marrakech.
“The message is for all banks, so that all rates are reduced because it is an obstacle to economic recovery,” he added.
The Central Bank of Colombia kept the reference interest rate at 13.25% in September for the third consecutive time, citing persistent inflation. Bonilla said the country’s inflation would reach 9.2% by the end of 2023.
Bonilla, who represents the government on the bank’s seven-member board, has previously pushed for rate cuts.
Two members voted in favor of a borrowing cost reduction at the September board meeting, although the bank does not disclose how each member voted. Five members voted in September to keep borrowing costs at 13.25%.
Colombian President Gustavo Petro regretted the September decision and said he hoped the cuts would come soon.
Colombian consumer prices rose 0.54% in September, bringing 12-month cumulative price growth to 10.99%. This figure is below the 2022 highs, but is still more than double the central bank’s long-term target of 3%.
The Central Bank’s technical team expects Colombia’s economy to grow 0.9% this year, compared to an expansion of 7.3% in 2022.
Bonilla said the conflict between Israel and Hamas “will surely have an impact on oil prices” and could force the government to make a further increase in domestic fuel prices.
He added that Congress should be able to pass labor, pension and health reform bills during the first half of 2024 as part of the government’s efforts to reduce poverty and inequality. (Reporting by Jorgelina do Rosario and Julia Symmes Cobb.)
Source: Ambito
