BOGOTA, April 1 (Reuters) - Colombia requires additional, more forceful increases in its benchmark interest rate to anchor inflation expectations and bring down consumer prices, policymaker Carlos Gustavo Cano said in a presentation published on Friday.
One of seven central bank board members, Cano said monetary policy is “clearly” expansive given the rate remains below the level of consumer-price increases and some indicators of inflation show excess in demand.
The bank has raised the key lending rate 200 basis points over the last seven months, lifting it a quarter point to 6.5 percent at its policy meeting earlier in March. The vote was not unanimous as some board members called for a bigger increase.
“In my opinion what’s needed is more forceful adjustments so that we can ensure that inflation begins to converge toward the target,” Cano wrote in the presentation published on the bank’s web site. “All annual inflation indicators show an increase.”
Most analysts reckon policymakers will raise borrowing costs at least one more time this year to help bring down inflation expectations.
Inflation blew out to 7.59 in the 12 months through February, way higher than the bank’s 2-4 percent target range.
Cano expects the economy to grow about 2.5 percent this year, below the bank’s official estimate of 2.7 percent and lower than the government’s 3 percent forecast. (Reporting by Nelson Bocanegra; Writing by Helen Murphy; Editing by Alistair Bell)