Colombia central bank expected to hold rate despite inflationary pressures
TLT•Colombia’s central bank is expected to keep its benchmark rate at 12% on Wednesday, despite inflation reaching 6.24% annually through August, more than double its 3% target.
1. Rate decision outlook
In a poll, 19 of 27 analysts expected the board to hold borrowing costs at 12%. Six forecast a 50-basis-point increase to 12.5%, and two projected a 25-basis-point hike to 12.25%. A hold would be the second consecutive one, following increases in January, March and June totaling 275 basis points.
2. Inflation and earthquake
The board is assessing the economic impact of an August 10 earthquake, which killed 335 people and destroyed homes and infrastructure across southwestern and central Colombia. Reconstruction is expected to cost at least 30 trillion pesos, about $9 billion, according to government estimates. Analysts said El Niño could also push inflation higher, while board member Olga Lucia Acosta said further action may be needed to steer inflation toward the 3% target.
