LatinNews Daily - 1 April 2025

*Colombia’s central bank (Banrep) has opted to hold its benchmark interest rate at 9.5% for a second straight meeting following a similar decision taken in January. According to a Banrep press release, four board members were in favour of the decision while three backed a 50-basis-point reduction. In a statement, Banrep said that the “risks of inflation pressures persist, associated with fiscal challenges and external uncertainty” and the decision to not change the interest rate “reflects a cautious approach to monetary policy, anticipating new information in the coming months that will provide further evidence on the feasibility of additional rate cuts”. It adds that this decision “reaffirms the Board’s commitment to achieving convergence with the inflation target [of 3%] under the context of recovering economic growth”. According to the same statement, after three months of stable inflation of 5.2%, annual inflation in February registered a slight increase to 5.3% with the most significant increases in the prices of processed foods and regulated items like gas and transport. The decision took some analysts by surprise. In a recent survey by Reuters, 16 of 21 analysts predicted that Banrep would cut its benchmark interest rate to 9.25%, one analyst forecast a larger reduction to 9.00% while just four analysts correctly predicted the decision. Meanwhile in a Bloomberg survey, 17 economists forecast that interest rates would remain unchanged while nine expected a quarter-percentage point cut.

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