The Central Bank of Colombia, an upper-middle income LATAM country on the coast of the Caribbean Sea, had raised its overnight benchmark borrowing cost by a 25 basis point to 2 per cent later this week, remarking the first movement after trimming interest rate to a 1.75 per cent last year in a bid to boost up the pandemic-hit nation’s economic growth, as Colombia’s Central Bank has been now vying to vent out a way to keep the lid on a high-flying inflation.
In point of fact, latest decision from the Central Bank of Colombia to hike its benchmark borrowing cost by 25 basis point, had largely been echoed the LATAM economy’s regional counterparts, while US Federal Reserve also had been set to resume a tapering of fiscal support for the economy as early as by November 2022, mostly aimed at controlling a caustic build-up in price pressures which had reportedly been capping the consumers’ purchasing power.
Nonetheless, recent move from the Central Bank of Colombia, the fourth-largest LATAM economy by GDP (Gross Domestic Product), was backed by four out of seven policymakers, while the rest had reportedly been looking to a rate-hike by 50 bps (basis percentage point).
Colombia’s Central Bank raises interest rate
Aside from that, the reserve bank also had raised its full-year GDP growth forecast to 8.6 per cent from a prior projection of 7.5 per cent, while the Bank had been expecting the LATAM economy’s inflation to heat up by 4.5 per cent this year compared to a previous forecast of 4.1 per cent.
Interestingly, latest approach from Colombia’s Central Bank had been the first rate-hike since the July of 2016.