Colombia’s next finance minister says rate rises have limited impact on inflation

BOGOTA, July 28 (Reuters) – Rate of interest hikes have a restricted capability to rein in accelerating inflation as a result of provide points are one of many key drivers of shopper worth will increase, Colombia’s subsequent finance minister, Jose Antonio Ocampo, stated on Thursday.

The federal government of Colombia’s subsequent president, the leftist Gustavo Petro, who takes energy on Aug. 7, will look to lift subsidies for poor individuals, Ocampo added.

Colombia’s central financial institution has raised its benchmark rate of interest by 575 foundation factors to 7.5% for the reason that starting of an upward cycle that began in September in a bid to manage inflation. Cumulative 12-month worth progress hit 9.67% in June, the best stage in 20 years and greater than triple the financial institution’s 3% goal.

The market majority expects the financial institution board to lift the speed by 150 foundation factors to 9% on Friday. learn extra

“As the issue is with provide, not demand, provide of excessive gas costs, worldwide meals costs, of fertilizers, the rate of interest’s capability to chop inflation could be very low,” Ocampo stated at a convention in Bogota.

Rate of interest rises merely result in expectations of decrease inflation in a while, Ocampo stated.

“The draw back is that (decrease inflation) comes from an financial slowdown,” he stated.

Ocampo, who as finance minister will maintain one of many central financial institution’s seven board seats and can vote on charge actions, raised his concern about additional will increase.

“I do not consider that we but have a contractionary financial coverage in Colombia, though we’ll see tomorrow what the financial institution board determines for us, the place I’m extra fearful,” Ocampo stated.

Ocampo stated he expects further assist for poor individuals affected by rising costs.

“Within the quick time period all one can do is improve subsidies for poor households … that is one of many measures to come back,” he stated.

Reporting by Nelson Bocanegra
Writing by Oliver Griffin
Enhancing by Leslie Adler

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