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Villamizar Says Inflation To Reach 9% by Year-End

COLOMBIA
  • Central bank co-director Mauricio Villamizar said Colombia had never seen such persistent inflation before, adding that the persistent supply-side shocks are responsible for about half of current inflation, speaking in a webinar with Banco Itaú. Villamizar expects Colombia’s CPI level to be around 9% at the end of this year.
  • Some further highlights from the central banker’s comments via Bloomberg:
    • El Nino weather phenomenon could have a 1-2 ppt inflation impact depending on its magnitude
    • Fuel prices and the weaker currency are putting strong pressure on inflation, the Colombian peso looks undervalued relative to its peers
    • Lending in Colombia has deteriorated as expected after interest rate rises, Colombian banks have enough liquidity and solvency buffers
    • Colombia’s economy will grow by around 1% in 2023 and 2024
    • Investment performance is a concern and is lagging compared to Brazil, Chile, or Peru
    • Colombia’s fiscal uncertainty is high
  • Separately, the government announced that it will deliver a “compensation bonus” to taxi drivers amid the rise in gasoline prices, according to local media.

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