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Finance Minister Bonilla Mentions September As Potential Easing Date

  • In an interview with Bloomberg on Wednesday, Colombian finance minister Ricardo Bonilla stated that BanRep intend to hold interest rates at current levels at the June 30 meeting. Interestingly, the finance chief additionally told Bloomberg that the central bank could cut rates around September this year.
    • “We expect that interest rates will stay unchanged this month, and we’ll monitor for the next two or three months until September, when we’ll analyze whether interest rates can start to come down”. If consumer price rises slow in line with expectations over the next six months, the central bank could “easily” cut its key interest rate by two percentage points by the end of the year, Bonilla said.
    • It is worth noting that on the other hand, Bonilla said the government will continue to phase out gasoline subsidies, which is likely to slow inflation’s convergence to its 3% target.
    • Bonilla added that he expects the currency to stabilize close to its current level at around 4,100 to 4,200 per dollar.
  • Speaking alongside Bonilla, Public Credit Director Jose Roberto Acosta said it makes sense to sell bonds this year since there’s no guarantee that interest rates will fall in 2024, and it is better to have a “full tank” to face any contingencies. The government plans to sell about $1.5 billion of dollar bonds this year, to pre-finance its 2024 budget, according to its financial plan published this month.

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