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BanRep Released The Minutes Of April 28 Meeting

  • Late Wednesday, the Colombian central bank released the minutes of the April meeting where it hiked the overnight lending rate by 25bps to 13.25%. Our review of this meeting can be found here.
  • Due to the unconventional vote split among the board, the minutes gave further details of board members deliberations. The four directors voting for the 25bp hike emphasised that inflation has not yet begun to decline, highlighting that core inflation continues to be high and on an upward trajectory. They underline that, although the measures of inflation expectations for terms above a one-year horizon show downward adjustments, those for year-end 2023 for both headline and non-food inflation continue high and on an ascendant path, which contributes to upholding price indexation mechanisms.
  • The two directors who voted for unchanged consider this to already be a contractionary stance since its actual real level has been situated above the neutral interest rate calculated by the technical staff for several months. This stance has already had obvious effects by weakening aggregate demand and decelerating economic activity, as confirmed by numerous leading indicators.
  • The sole voter for a bolder 50bp increase stated that core inflation continues to show significant increases such as those that occurred in March, when it rose 47 bps, driven by price indexation. Furthermore, he noted that the current account deficit of 6.2% as a proportion of GDP at the end of 2022 and its projection of 4.1% for 2023 continues to be a considerable external imbalance, which requires hastening the adjustment process of the Colombian economy.
  • The link to the minutes is here:

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