colombia raised interest rates to the highest level since 1999 after political turmoil triggered a plunge in the nation’s bonds and currency this week the central bank lifted its benchmark rate by a quarter percentage point to 1325 on friday governor leonardo villar told reporters in bogota four of the sevenmember board voted for the move two voted to hold and one argued for a bigger increase of half a percentage point the decision was forecast by 14 of 27 analysts surveyed by bloomberg while the rest had expected the bank to leave the rate at 13 ending a year and a half of monetary tightening colombia’s move flouts a regional trend brazil peru and chile have halted interest rate increases and some smaller countries in the region costa rica and uruguay have even started to ease policy among major economies only mexico and colombia have continued to increase borrowing costs in recent months and in mexico’s case policymakers will analyze halting the tightening cycle at their next meeting may 18 banxico governor victoria rodriguez said this week president gustavo petro’s decision this week to oust his marketfriendly finance minister jose antonio ocampo sent the peso plunging nearly 3 on thursday the biggest drop among more than 140 currencies while the cost of insuring colombian bonds against default jumped goldman sachs group inc said before the meeting that the rate rise would “counter a rising country risk premium” “economic activity continues to decelerate but at a slower rhythm than previously” the bank said in its statement “inflation expectations remain above the target” friday was ocampo’s last meeting his replacement ricardo bonilla said this week that he expects colombia to start cutting interest rates in the second half of the year read more colombia needs to lower fiscal external deficits bonilla says policymakers have raised their key rate by 115 percentage points starting in september 2021 in their steepestever series of monetary tightening the bank is now caught between a slowing economy and a persistently elevated inflation rate while consumer price rises are slowing in other major economies in the region in colombia they have continued to accelerate annual inflation accelerated to 1334 in march though the bank expects it to start slowing this quarter the central bank forecasts economic growth of just 08 this year from 75 in 2022