Colombia’s Central Bank took a cautious step, cutting interest rates by 25 basis points in January, less than the 50 points many expected.
This cautious move has led experts to predict a more significant reduction in March.
The bank‘s chief, Leonardo Villar, highlighted a careful strategy: avoiding premature rate cuts to prevent future increases.
This caution is due to uncertainties like the upcoming El Niño phase, which affects inflation.
The bank pointed out concerns like the minimum wage hike, El Niño’s impact, and the need for clear government policies on diesel prices.
This comes after a pause on diesel price increases due to strike threats from the transport sector.
With economic growth data for 2023 due on February 15, expected to be around 1%, this will inform the bank’s next steps.
Bancolombia advises caution amid El Niño and diesel price uncertainties, suggesting a slower pace in rate reductions.
Bancolombia’s team believes the inflation challenge persists, making aggressive rate-cut forecasts for 2024 optimistic unless diesel prices stabilize.
BanBogotá forecasts 50-point March rate cut, warning slow pace may necessitate larger future reductions.
Olarte of Scotiabank expects March meeting to cut rates by 100 basis points to 11.75%, indicating strategic adaptation.