Gustavo Petro asks banks to lower rates to help the economy

The Colombian President, Gustavo Petroasked the financial sector on Friday to reduce interest rates of loans for the productive sector and mortgages, while considering it necessary to raise tariffs to protect local activity.

Petro’s announcement comes as indicators show a slowdown in the fourth-ranked economy Latin Americaimmersed in its highest interest rates and inflation in more than two decades.

“Interest rate hikes put the country’s entire productive economy at risk, the government must mitigate that risk,” Petro said in a televised address. “I ask private banks to reduce their intermediation rates to the maximum for loans in the productive sector, including housing.”

The Central Bank has increased its reference interest rate by a total of 1,150 base points to the current level of 13.25% in a monetary cycle to contain the pressures on inflation that at the end of April stood at 12.82% per year, plus four times above the 3 percent target.

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Petro, the first left-wing president in the history of Colombiaalso considered an increase in tariff prices.

“Additionally, higher tariffs must be responded to to protect the industrial and agricultural sectors and to protect national labor,” he said without offering further details.

The government reported earlier that Colombian industrial production contracted 2% year-on-year in March, in its first drop since January 2021, while retail sales fell 7.1%, reflecting the slowdown in the country’s economy. South American country.

A Reuters poll showed that Latin America’s fourth-largest economy would have expanded 2.8% annually in the first quarter, well below the 7.8% it registered in the same period last year.

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