LatinNews Daily - 01 February 2024

*Colombia’s central bank (Banrep) has lowered its benchmark interest rate by 25 basis points to 12.75%. This was the second consecutive reduction in the interest rate following a previous 25 basis point reduction in December. A Banrep statement noted that annual inflation fell for the ninth consecutive month in December to 9.28%, and that analysts surveyed by the bank are now forecasting this rate to fall to 5.2% by the end of 2024 – down from the previous month’s estimate of 5.7%. Banrep’s GDP forecast for 2023 remains at 1%, with GDP for 2024 predicted to be 0.8%. The bank also noted that external financial conditions have improved, with global inflation on a downwards trajectory and the global economy slowing less than expected. Domestically, Banrep also noted a fall in Colombia’s risk premium in 2023 and highlighted that the peso appreciated at a greater rate than comparable currencies in the region. However, it noted that a higher-than-expected increase to the minimum wage in 2024 could influence inflation, and highlighted ongoing risks posed by the El Niño weather phenomenon.