Just as analysts had predicted, The Bank of the Republic increased its interest rates this Thursday by 100 basis pointsgoing from 4% to 5%.
Among the reasons he had for making this decision is the increase in the price of food, sinceTotal inflation continued its upward trend and registered in February an annual variation of 8.01%, within which the food category stands out, whose annual increase was 23.3%.
The manager of the Bank of the Republic, Leonardo Villar, pointed out that “Russia’s invasion of Ukraine could intensify upward pressure on international prices of some agricultural goods and inputs, energy and oil”. In this context, the different measures of inflation expectations have continued to rise.
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In the case of economic analysts, the monthly survey by Banco de la República showed that they expect a total inflation of 6.4% for 2022 and 3.8% for 2023.
Meanwhilethe technical team revised up its growth forecast for 2022 from 4.3% to 4.7%. The foregoing implies that excess production capacity would continue to decline at a faster rate than expected.
For Colombians, the increase in the interest rates of the Banco de la República implies that the banks that lend us money will also raise their interest rates, because that rate of 5% is the one that the banks request to borrow from the Banco de la República.
With this, the Issuer seeks to curb this reactivation a little so that food prices do not continue to rise.