BOGOTA (Reuters) – Colombian Finance Minister Ricardo Bonilla, who is also a director of the country’s central bank, said on Wednesday he will ask the board to start cutting the benchmark interest rate at the board’s meeting next week, citing a slowdown of inflation.
Colombia’s monetary policy authority has held the rate steady at 13.25% since June, when it ended an upward cycle during which the board hiked its benchmark rate by 1,150 basis points in a bid to curb rampant inflation.
“I’m going to insist the (central) bank start sending the message it’s lowering rates from September, even if it’s a very small reduction, but that the message starts being sent,” Bonilla, one of the central bank board’s seven directors, told reporters.
“What we really need is to show that the trend of reducing inflation is what’s important, not the size by which it’s falling,” he said, adding that Colombia’s inflation will close the year at 9.2%.
Most analysts expect the bank will hold the rate steady at its meeting on Sept. 29 because inflation is decreasing at a slower than expected rate.
Colombia’s 12-month inflation through Aug. 31 stood at 11.43%, almost four times the bank’s 3% target.
“We think the fundamentals to begin the process of interest rate cuts are not in place and that it is more reasonable to wait for September’s inflation results, which will be published at the start of October, to give us new signals about consumer price behavior,” Bancolombia said in a research note shared with Reuters.
(Reporting by Carlos Vargas and Nelson Bocanegra; Writing by Oliver Griffin; Editing by Matthew Lewis)
