(Bloomberg) -- The steepest series of interest rate increases in Colombia is nearing an end as inflation is expected to slow sharply with the economy set for a hard landing next year, the country’s central bank chief said.

Policymakers have responded to the highest inflation in more than two decades — due mainly to international factors — with a “contractionary” policy stance, the bank’s governor Leonardo Villar said in an interview with El Espectador newspaper published Saturday.

“I couldn’t say at this point that the rate increase process is over,” Villar said. “I can say is that we are getting closer to what could be considered the ceiling of that process.”

The central bank lifted the benchmark rate to 12% at its December meeting, representing a 10.25 percentage point increase since the cycle began in 2021. Annual inflation accelerated in November to 12.5%, the fastest since 1999.

Inflation should start easing in the coming months, and higher interest rates should impact the economy “very soon”, he said, adding that price increases are forecast to slow to near 7% by the end of 2023 and will only hit the bank’s 3% target in two years.

Economic growth will cool to around 0.5% in 2023 from an expected expansion of almost 8% this year, he said.

Economists surveyed by the central bank expect a final 50-basis-point rate hike in the January meeting to end the cycle at 12.5%.

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