The newest member of the board of Colombia’s central bank has warned against lowering rates too soon, putting her at odds with the president who appointed her.

“There’s a big risk in easing early then having to reverse course,” Olga Lucía Acosta told Bloomberg in an interview published on October 18.

The Central Bank of Colombia has maintained its policy rate at 13.25% since April, after raising it 1,150 basis points over the previous 19 months. At the September policy meeting, the board voted 5–2 to hold rates, with the minority advocating a 25bp decrease. The next decision will be announced on October 31.

“We have to stick to the task,” Acosta told the business news service. “We have to wait for better results, and I believe they will be there soon.”

Colombia has held rates even as other Latin American central banks, including those in Brazil and Chile, have begun reducing their policy rates. This is because Colombian inflation has proven more stubborn than that of its neighbours. In September, headline inflation was 11%, more than twice the rate in Brazil and Chile, though below the peak of 13.3% recorded in March.

Acosta was optimistic that rate cuts could come, as inflation moderates. “Core inflation, finally, [is] starting to cool,” she noted.

“We are starting to see that the requirements are coming together,” she said.

The director’s comments contrast with those of the president who appointed her, Gustavo Petro, as well as much of the business community. Petro said increasing rates “would only bring the global recession into the Colombian economy” in a social media post in October 2022.

In September, the finance ministry, banking association and a business lobby jointly issued a call for cuts in the policy rate. Finance minister Ricardo Bonilla, who sits ex officio on the central bank’s board, called for “a very small reduction” in the policy rate. Another member of the board, Ricardo Steiner, said this “would not be prudent”.

Marc Hofstetter, a professor of economics at the University of the Andes in Bogotá, thinks Acosta is speaking on behalf of the central bank. “She is delivering an institutional remark.” He adds that if inflation goes down sufficiently, there may be rate cuts before year’s end.

Petro appointed Acosta to the board late last year, after a court annulled the appointment of Alberto Carrasquilla, a former finance minister. The council of state, the country’s highest administrative court, ruled then-president Iván Duque had violated a gender-quota law by appointing Carrasquilla.

The central bank board has five directors, plus the finance minister and the governor, who is co-opted by the other six members. The Central Bank of Colombia has no separate monetary policy committee, so the board sets monetary policy.

The other four directors are all Duque appointees. Although the central bank law staggers directors’ terms to prevent any one president obtaining such an overwhelming majority on the board, Duque was able to fill all five seats during his term due to resignations.