Blog BanRep: Caution in Adjusting the Monetary Policy Interest Rate, also in the Decline
Certain conditions make it difficult for the monetary authority to be very aggressive towards interest rate cuts. The risk is that very rapid declines may have to be reversed if events materialize that hinder the inflation target in the first half of 2025
Publication Date:
Wednesday, 03 April 2024
08:00
High-altitude climbers know very well that the descent from the top can be as dangerous as the ascent, so they advance cautiously in this second stage of the journey to ensure a healthy return home. Something similar could be said of monetary policy. Risks do not disappear in the decline period of the interest rate. Therefore, just as in the mountains, the downward cycle of the policy rate should be carried out cautiously so as not to frustrate the return of inflation to its target.
