President Iván Duque rejected the interest rate hike announced by the bank of the Republic

The increase from 100 basis points to 5 per cent, which stood at 4 per cent in January, was criticized by President Duque, who described as abrupt. He also pointed out that rate increases “must be finely managed, inflation controlled, but also continue to maintain growth because such growth is essential to overcome poverty and improve poverty. quality of life of Colombians”.

This is a discussion that the directive of the Banco de la República has every month, what it seeks is for the banking sector to pay more for the money lent to them by the central bank, consequently, they must charge customers more, who request access to loans. The main reason for such decisions is to reduce the cost of living, or inflation, because in theory “there is less money available”.

With the increase, it is also expected that the prices of products in the basic basket will fall, which have increased month by month and according to analysts' expectations, will continue with the same behavior.

But, Duque assured that the decisions taken by the Banco de la República must ensure that the growth of the economy does not slow down, should not generate setbacks, since it is necessary to create more jobs and opportunities. In addition, he asked to analyze the measures taken, so that they do not affect the pocket of either Colombians or the country.

The president explained that inflation in the country is caused by the increase in inputs and raw materials, also because of the war between Russia and Ukraine, among other factors that were triggered by the pandemic.

Increases have been occurring since September last year; the Banco de la República board has taken into account the continued rise in inflation, increases in international prices of agricultural inputs, energy and oil. These factors generate estimates that are expected to be 6.4% by 2022 and 3.8% by 2023.

In fact, during the meeting five of the co-directors voted in favor of this increase, while the remaining two voted to increase 150 basis points and bring the rates to 5.5%. The issuer reiterated that it is committed to the gradual return to inflation of 3% per year, so it will continue to make the necessary decisions, he said.

Finally, it was said that the Bank's technical team “revised its growth forecast for 2022 from 4.3% to 4.7%, which implies that excess productive capacity would continue to reduce at a faster rate than expected”.

added President Iván Duque.