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BanRep Review - Analyst Views

COLOMBIA
  • **Goldman Sachs: Three factors support the view that the door for at least another hike remains open. First, the forward guidance closely resembles the language from the Oct meeting and, critically, lacks an explicit cue about the end of the tightening cycle. Second, Governor Villar carefully reiterated that future decisions will be based on prevailing macroeconomic conditions. Third, the MPC acknowledged the persistence of excess demand: a prominent concern in previous statements and a driver of rate hikes.
    • At this stage, GS are pencilling in a 50bp hike at the January meeting and will fine-tune their baseline call on the overall tone of the minutes and incoming data.
  • **JPMorgan: Will look to the minutes and the outlook for December and January inflation but for now JPM maintain their call that a 50bp hike in January would be the last of the cycle. JPM think Villar’s comments reinforcing the idea that BanRep was close to considering its end game, and the absolute level of rates now being attained, are still consistent with their prevailing forecast. Their call thereafter is for BanRep to remain on hold until July 2023, by which time they see gradual easing commencing
  • **Scotiabank: It is unclear if the central bank wants to slow down the pace of the hiking cycle. Scotia think that seeing the peak in inflation will be the critical signal for a pause. Their current projections are that inflation would peak in December; however, as uncertainty remains high, they expect the central bank to continue in a wait-and-see mode in the forthcoming months. For now, they expect a 12.50% as a terminal rate, however, Friday’s meeting showed that the balance of risk is tilted towards further rate hikes in the future.
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