More Colombia Rate Hikes Likely, Says BBVA

Another rate hike in Colombia looks likely as inflation expectations for 2008 and 2009 continue to be high, according to BBVA. “Non-food inflation is above the central bank’s goals,” says Juanita Tellez, a senior economist with the bank, who declined to specify how much of an adjustment is needed. February inflation indicators, to be released Saturday, could accelerate a rise if they are high. “If not, the central bank will wait and see how global economy continues to develop,” says the analyst. Recent appreciation of the peso is meanwhile attributed to weakness in the dollar, “something that a small economy like Colombia cannot control,” Tellez says. Colombia last week raised the reference rate to 9.75% from 9.50% in a surprise move that followed higher-than-expected January inflation data.