Colombia central bank slightly raises 2024 inflation outlook to 5.5%

Colombian economy forecast: Colombia's central bank's technical team, in a quarterly report published on Friday, announced a slight upward revision of its inflation forecast for year 2024 to 5.5 per cent, up from previous estimate of 5.4 per cent. justment comes amid ongoing economic assessments in South American country.

While new projection remains below Colombia's inflation rate of 7.36 per cent for 12 months through March, it still exceeds central bank's long-term target of 3 per cent. Looking ahe to end of 2025, technical team anticipates inflation of approximately 3 per cent, slightly higher than previous estimate of 2.8 per cent.

report underscores several upward risks for inflation, including exchange rate dynamics, potential justments to costs of public services and transportation, and climate conditions that could impact food prices.

On economic growth front, technical team also revised its forecast for 2024, now expecting growth of 1.4 per cent compared to previous estimate of 1.1 per cent. ditionally, team predicts a growth rate of 3.2 per cent in 2025, as announced by bank board chief Leonardo Villar earlier in week.

report highlights improved economic activity in first quarter of 2024, particularly driven by robust performance in agriculture sector, reflecting high supply levels during se months. Year-on-year growth in first quarter is estimated to have reached 0.3 per cent.

In monetary policy decisions, central bank's board reduced benchmark interest rate by 50 basis points to 11.75 per cent on Tuesday. This move marks a total reduction of 150 basis points since December when bank initiated its easing policy.

Looking ahe, analysts in a recent Reuters poll anticipate benchmark interest rate to conclude 2024 at 8.25 per cent, with a furr decline to 5.50 per cent by end of 2025. forecasts suggest ongoing justments in monetary policy to navigate Colombia's economic landscape.

(With Reuters inputs.)