
New uptick in Colombia inflation builds case for more rate hikes

A new uptick in Colombia's inflation in January will help build the case for further interest rate hikes when the country's central bankers meet later this month.
The 12-month inflation rate climbed to 7.45% from 6.77% in December and 3.82% in January 2015, according to statistics agency Dane. This was the highest level since December 2008, Goldman Sachs said in a research note.
Month-on-month inflation was 1.29% in January and came in well above the consensus forecast of 0.93%.
Colombia's high CPI in 2015-16 is mainly due to so-called imported inflation resulting from currency depreciation, while the weather phenomenon known as El Niño had an impact on food prices.
To bring inflation back to its 2-4% target range, the central bank upped the key interest rate 25 basis points to 6% last month and this followed a 25bp hike in December.
The central bank board will hold the next monetary policy meeting on February 19.
Goldman Sachs predicts that fresh 25bp rate hikes will come this month and in March.
Credit Suisse said that it expects the board to remain split in the short term with a majority of directors favoring continued 25bp increases while a minority will argue for more aggressive hikes of 50bp.
(Pictured: José Darío Uribe, Colombia's central bank president)
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