BOGOTA, Nov 2 (Reuters) – Colombia’s central bank technical team predicted on Wednesday that rate hikes would continue beyond market expectations, citing higher inflationary pressures, excess demand and a depreciation of the peso .

The bank’s seven-member board raised borrowing costs by 100 basis points to 11% last week, their highest level since July 2001.

Analysts in a Reuters poll ahead of the latest board vote predicted policymakers would make a final 50 basis point rate hike in December. Read more

The council will not make a decision on rates in November.

Colombia’s economy is suffering from inflation fueled by high domestic consumption and global supply chain issues, as well as a depreciation of the peso of more than 25% this year so far.

“These are risks that are materializing and signify greater inflationary pressures that require a stronger than expected monetary policy response,” technical team leader Hernando Vargas said during a presentation on the quarterly financial report. monetary policy of the entity.

In the report, released on Monday, the team raised its inflation projection for 2022 to 11.3% from a previous estimate of 9.7%, and its estimate for 2023 to 7.1% from 5.7%. previously.

Inflation will hit 3.5% in 2024, closer to the bank‘s long-term target of 3%, the team said.

Reporting by Nelson Bocanegra Writing by Julia Symmes Cobb; Editing by David Gregorio

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