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This Box summarizes the main findings on central banks’ experience with asset purchases in response to the Covid-19 pandemic, emphasizing the Colombian case.

Over the last year and a half, the world has faced a major setback in the low and stable inflation behavior that had been observed for several years. The price increases that have occurred since 2021 have taken place in a context of increases in aggregate demand resulting from the economic…

The minimum wage (MW) is one of the most widely used public policies in almost all the countries. Included among its objectives are the protection of workers against unduly low wages and to contribute to the reduction of poverty and inequality. However, there has been evidence of the adverse…

The U.S. financial system experienced a period of stress during March 2023 in which several regional banks including First Republic Bank, Silicon Valley Bank, Signature Bank, and Silvergate Bank, etc., were affected. The collapse of these institutions had multiple causes and exposed the potential…

1. Performance of the Exchange Rate and some of its Determinants

In recent years, Colombia economy has seen a growing trend in the digitalization of payments (perhaps partly as a consequence of the pandemic). This is evident in the increased use of electronic channels.

Since the end of 2021, the growth of inflationary pressure brought about by a combination of supply and demand factors has generated a scenario of tightening international financial conditions in an environment of normalization of monetary policy interest rates and a new cycle of dollar…

Automatic price adjustment mechanisms, known as indexing, have mainly been a relatively common practice in developing economies even under different macroeconomic environments. These mechanisms often arise spontaneously in agents’ private contracts as a tool to protect themselves from high and…

Banco de la República (the Central Bank of Colombia - Banrep) generates information for decision-making, accountability, and public dissemination purposes. In particular, the Financial Markets Report is framed within the principle of public disclosure and contributes to fulfill the Bank's service…

Global inflationary pressures remain high, although showing a downward trend, while economic activity demonstrated greater resilience than expected. 

The analysis presented in this edition of the Report allows concluding that the Colombian financial system has ample liquidity and solvency levels which are sufficient to confront the occurrence of extreme and tail risk events.I. Performance of Credit Institutions

I. Desempeño de los establecimientos de crédito

1. Macroeconomic Summary In December, headline inflation (13.1%) and the average of the core inflation measures (10.3%) continued to trend upward, posting higher rates than those estimated by the Central Bank's technical staff and surpassing the market average. Inflation expectations for all terms…

Inflation has decreased since April, and it is projected to continue to reduce significantly throughout 2024 as it converges toward 3%.

Inflation would peak in March and start to gradually decline as of the second quarter of 2023, bringing inflation back to the 3% target over the next two years.

As foreseen in the April Report, inflation began to fall in the second quarter of 2023. It is expected to continue declining in the following quarters and return near the 3% target by the end of 2024.

IntroductionBanco de la República is celebrating its 100th anniversary in 2023. This is a very significant anniversary and one that provides an opportunity to highlight the contribution the Bank has made to the country’s development. Its track record as guarantor of monetary stability has…

International Macroeconomic Environment 

During 2022, Colombian companies that resorted to international fnancing sources faced interest rate increases and a sharp depreciation of the peso against the dollar (21%). This may have important implications for the balance sheets of real sector companies with a negative exchange rate mismatch…

The increasing digitization of fnancial services has increased the system’s exposure to cyber-attacks. This could compromise the security of the information, its operability and, therefore, its stability. The materialization of a cyber-risk event that affects the payment system could disrupt the…

After the 2008 fnancial crisis, the U.S. Federal Reserve (Fed) drove the benchmark interest rate to historically low levels that became more pronounced in the wake of the covid-19 pandemic. At the same time, starting in March 2020 several measures to provide the market with liquidity were adopted,…

By virtue of its administrative and financial autonomy, Banco de la República (the Central Bank of Colombia) has its own independent patrimony and is subject to its legal framework, contemplated in Articles 371 to 373 of the Political Constitution, Law 31 of 1992 and its Bylaws, issued by Decree…

Inflation indicators remain above the target of most central banks despite continuing to show a decline in most countries. The main central banks of developed economies suggested the possibility of keeping monetary policy rates (MPRs) at high levels for a longer period.Fixed income assets…

Inflation indicators surpassed expectations, staying above the targets set by most central banks. Major central banks in developed economies maintained a cautious stance, contributing to expectations of prolonged contractionary monetary policy.

The global economy proved resilient during the period analyzed, although signs of a slowdown emerged towards the end of the quarter.Inflation resumed its convergence towards targets in most major developed economies.There was a shift towards less restrictive monetary policy stances and looser…