Colombia Inflation Forecast and Interest Rate Cut Predictions
Colombia’s Inflation Trends
Colombia might experience a slowdown in inflation for the 11th consecutive month in February, according to a recent poll. This trend, coupled with sluggish economic growth, could prompt the central bank to consider more substantial cuts to its benchmark interest rate.
Analysts’ Predictions
A survey conducted among 20 analysts revealed that consumer prices are anticipated to increase by 0.94% in February. This figure is significantly lower than the 1.66% recorded the previous year and slightly higher than the 0.92% seen in January. Estimates ranged from 0.75% to 1.32%.
Impact on Inflation Rate
If the median estimate holds true, Colombia’s 12-month inflation rate through February would decrease to 7.58%, falling below January’s 8.35% but remaining above the central bank’s 3% target. Data on inflation for February will be released by the government’s DANE statistics agency on March 7.
Expectations on Interest Rate Cuts
Fourteen analysts predict that lower inflation in February will lead the central bank to reduce its interest rate by 50 basis points to 12.25% by the end of March. On the other hand, five analysts foresee a 75 basis-point cut to 12%, while one analyst expects a 25 basis-point reduction to 12.50%.
Expert Insights and Economic Growth
Jackeline Pirajan, an economist at Scotiabank Colpatria, suggests that the significant deceleration in inflation during the first quarter of the year may prompt the central bank to implement a more substantial rate cut in March. Colombia’s economy grew by a mere 0.6% in 2023, falling short of market expectations.
Future Inflation Projections
Analysts’ forecasts for inflation at the end of this year have risen to 5.47%, up from 5.38% in the previous month’s survey. The central bank anticipates that inflation will align with its 3% target by the first half of 2025 at the latest.
