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BanRep Governor Says Real Neutral Interest Rate Has Increased

COLOMBIA
  • The BanRep Governor, Leonardo Villar, says the central bank needs to implement contractionary interest rates to prevent the economy from overheating and to garner control of inflation expectations
  • Villar made comments in a webcast event organized by Skandia.
  • Colombia’s real neutral interest rate has increased from its 1.9% estimate on higher international rates
    • Says it’s important to look at longer-term inflation expectations to measure how policy makers can act with interest rates.
    • Inflation expectations show CPI will fall importantly, but policy makers must do more to strengthen that path. (BBG)

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