(MENAFN– The Rio Times) Colombia’s inflation is decreasing but is still above the central bank’s target as of October 2024. The annual inflation rate is 5.81%, down from a peak of 13% in March 2023 but above the Banco de la República’s goal of 2% to 4%.
President Gustavo Petro supports his administration’s policies aimed at reducing inflation, arguing that they warrant faster interest rate cuts from the central bank. However, economists warn that inflation isn’t fully controlled yet.
The term “anchoring” refers to expectations that inflation will fall into the target range within one to two years. Monthly surveys by the Banco de la República assess analysts’ inflation expectations. October’s survey predicts a monthly inflation rate of 0.17%, lowering the annual rate to 5.73%, still outside the target range.
For October 2025, analysts expect inflation to be 4.13%, slightly over the target. The bank considers these expectations when deciding on monetary policy. If inflation expectations stabilize within the 2% to 4% range by the end of the year, more significant interest rate cuts may occur. The central bank interest rate is forecasted to drop to 9.6% soon, around 8.75% by the end of 2024, and potentially reach 6.75% in early 2025.
In 2025, President Petro will appoint two new board members to the central bank, possibly leading to a softer monetary policy. Finance Minister Ricardo Bonilla has hinted at “generational renewal” at the bank, indicating a preference for appointing two women.
As Colombia’s economy recovers from the pandemic, inflation and monetary policy remain critical topics for policymakers and analysts.
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