BANREP Preview: Expected Unchanged at 1.75%

Colombia Central Bank Preview – 1800GMT/1300ET - Overnight Lending Rate seen unchanged at 1.75%.

All 22 analysts surveyed see unchanged policy today. The decision should be unanimous and in line with previous meeting, adding evidence that the easing cycle is over.

Developments:

• October Inflation printed well below expectations at -0.06% m/m (vs +0.15% consensus), with core inflation declining towards the August record-lows. 12-month-ahead inflation expectations declined just slightly to 2.77% y/y from 2.80%
• On the flip side, economic activity surged with retail sales declining just -0.8% yoy (vs -9.3% consensus).

* In October the board's forward guidance appeared more neutral: highlighting it is "prudent to keep the current [monetary policy] stance and wait for new information on the shocks and the evolution of variables that affect the policy reaction." The Governor added the bank saw the current pause "possibly lasting for several months."

* Colombia's expected decision to hold rates could further bolster the peso which has been the second-best performing EM currency this month firming from 3850 to 3615.