Photographer: Mariana Greif Etchebehere/Bloomberg
Colombia Central Bank to Reduce Frequency of Rate DecisionsBy
Colombia’s central bank is following Chile’s example and reducing the frequency of its policy meetings to eight a year, from twelve, to give board members more time to weigh key data.
The change follows “best international practices” with the policy meeting months decided in accordance with the publication of important economic statistics, central bank Governor Juan Jose Echavarria told reporters Friday. Chile’s central bank said in September that it would also cut the frequency of its policy meetings to eight, from twelve, citing similar reasons.
The less frequent meetings will “improve the process of preparation which serves to support the taking of monetary policy decisions, increasing the amount of information and the time available for the analysis,” Echavarria said.
Policy makers will still meet together 12 times a year, but only make rate decisions on eight of those occasions. In exceptional circumstances, they could move rates at those additional four meetings, or call extraordinary meetings at any other time, Echavarria added.
Daniel Velandia, head of research at Credicorp Colombia’s unit, said the announcement may make it even harder to predict what the bank will do. Banco de la Republica has surprised a majority of analysts six times since December, the making it the least predictable central bank in the region.
“Perhaps the fact that they won’t necessarily refrain from moving rates at the other four meetings will create additional communication challenges,” Velandia said.
The change may complicate life for interest rate swaps traders, who will have to adapt to the new release calendar rather than pricing on a monthly basis, said Sergio Olarte, an analyst at BTG Pactual’s Colombia unit.