By Nelson Bocanegra
BOGOTA (Reuters) -Colombia’s central bank board raised the benchmark interest rate by 25 basis points to 13.25% on Friday, continuing a long tightening cycle amid persistent inflation and significant stability risks to the global financial system, it said.
Four policymakers voted for the 25 basis point increase, while two wanted to keep the rate unchanged and one voted for a 50 basis point increase.
While economic activity continues to slow, it is decelerating at a lower than expected rate, the board said in a statement.
Annual consumer price growth remained relatively stable in March thanks to a slowdown in food price increases – which fell to 21.8% last month from 24.1% in February – but inflation expectations remain above target, the bank said.
Consumer price growth in the 12 months through March was 13.34%, more than four times the bank’s 3% target.
The bank’s technical team updated its growth forecast for 2023 for Latin America’s fourth-largest economy to 1%, up from 0.84%.
It was impossible to say if the increase would be the last of this tightening cycle, which began in September 2021 and has seen the rate rise by 1,150 points, said board chief Leonardo Villar after reading the statement.
The meeting was the last for Finance Minister Jose Antonio Ocampo, whose replacement was announced in a cabinet reshuffle earlier this week.
The rate change was at odds with comments made by incoming minister Ricardo Bonilla, who takes office on May 1, who told local radio on Thursday he expected the board to hold the rate due to the fall in food prices.
Though many market investors had hoped Ocampo would stay on the job to moderate some of Petro’s reform proposals, other analysts have said that concerns about Bonilla, previously finance secretary for Colombia’s capital Bogota, are exaggerated.
Fifteen of 26 analysts in a Reuters survey last week predicted the seven-member board will hold the rate at 13%, while the remaining 11 projected an increase to 13.25%.
(Reporting by Nelson BocanegraWriting by Julia Symmes Cobb and Oliver GriffinEditing by Alistair Bell and Aurora Ellis)
