BOGOTA: The technical team of Colombia’s central bank on Monday revised its inflation projection for this year to 8.7% from 7.1% previously, amid persistent high prices which have led the bank’s board to make sharp increases in borrowing costs.

The technical team, whose predictions are closely watched by board members, held its 2024 inflation prediction steady at 3.5% in its quarterly monetary policy report. Both projections overshoot the bank’s long-term inflation target of 3%.

The projections are based on high uncertainty about international financial conditions, the exchange rate, the adjustment of domestic demand and other factors, the team said. Consumer prices rose 13.12% in 2022, the highest inflation in nearly 24 years. Interest rates will be higher than predicted by the market, the team added.

“The pathway anticipated by the technical team for the interest rate is, on average for a horizon of eight quarters, greater than that expected by the market in the (bank’s) survey in January 2023,” the report said.

Inflation takes the turkey out of Christmas in Latin America

The board raised the benchmark interest rate by 75 basis points to 12.75% last week, a smaller increase than expected by a majority of analysts but still making it the highest rate since 1999.

Bank chief Leonardo Villar said the board has not necessarily ended its tightening cycle, despite market predictions the rise would be its last.