Banco de la República still believes that inflation may decrease in the coming years

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Despite the factors to the contrary, the Issuer maintained the goal of 3% by the end of 2024. It called for restraint when negotiating salaries and set prices

Banco de la República still believes that inflation will decrease.

The Government states in the National Development Plan that it will not affect the independence of the Banco de la República. Colprensa

This Friday, November 25, after the meeting of the Board of Directors of Banco de la República, its members stated that it is still a possibility that inflation in Colombia will decrease in the medium term. In fact, the issuer will maintain the inflation target of 3% by the end of 2024.

The managers recalled that inflation depends on several factors, such as the shock of historically high external and internal costs, as well as dynamic demand levels and the deterioration of the international economy. The latter would be causing pressure on exchange rates and adjustments in consumer income at higher inflation rates. In addition, the reduction in inflation poses the dilemma between accelerating the result and paying the short-term costs —less products and less employment.

With all this, the issuer affirmed that its monetary policy still aims to drive inflation to a target of 3% in a period of two years, as well as the sustainability of the country's economic activity.

“In this adverse context, since September 2021, the Board has increased the policy interest rate from 1.75% —a level that at the time it deemed necessary to countercyclically face the recessive challenges of the pandemic— to the current 11%. This adjustment has been consistent with the objective of bringing inflation to 3%, initially through a process of normalization of monetary policy and more recently assuming a contractive stance”, explained the directors of the Banco de la República in a statement.

So, even with the factors against it, the issuer believes that annual inflation will be around 7% at the end of 2023. If this forecast is fulfilled, the trajectory would be drawing to contract the phenomenon to 3% on the estimated date, a year later. Still, they issue a warning: for this trend to continue, wage negotiations and price setters must make reasonable decisions.

Regarding 2022, the expectation is that inflation closes above 11%: that is, there is a discreet adjustment of one hundred points with respect to October, when the highest percentage in 23 years was registered.

Alberto Carrasquilla's last meeting?

This meeting could be the last in which co-director Alberto Carrasquilla participates. Just this Thursday, hours before the meeting, the Fifth Section of the Council of State annulled his appointment as a full-time member, after considering that the Quota Law was not complied with

Thus, the lawsuit filed by Juan Manuel López Molina, Joan Sebastián Moreno Hernández and Douglas Lorduy Montañez against the act of appointment of Carrasquilla, replacing Carolina Soto, carried out on September 1, 2023 by President Iván Duque, was resolved.

In a statement, she specified that she found it proven that such appointment ignored article 4 of Law 581 of 2000, which establishes the adequate participation of women at the highest decision-making levels in a minimum of 30% (gender quota), in addition to other postulates of conventional and constitutional rank that protect the right to equality.

“The Electoral Chamber, consequently considered that since there are five full-time members, the 30% gender quota was met with two women, therefore, to provide for the absolute lack caused by the resignation of Carolina Soto, a woman should have been appointed, which was not or it happened, on the contrary, those members were made up of four men and a single representative of the female gender, ”she argued.