Barclays on Colombia: Faster Withdrawal Of The Stimuli

COLOMBIA

Barclays think the strong pace of economic activity is likely to be sustained through 2022, driven by strong domestic demand, business confidence that remains high despite electoral uncertainty, and the possibility of a rebound in oil production. These factors are likely to push Colombia to grow more than 6% in 2022.
Inflation remains more contained in Colombia than in the rest of the major LatAm economies but has been accelerating and surprising to the upside. Despite expecting inflation to peak in February, recent depreciation of the exchange rate and the 10% increase in the minimum wage could delay the beginning of the convergence of inflation back to the target.
While the inflation risks could be contained and might start to ease over the coming months, the current account deficit will probably be the main source of concern for Banrep. Barclays believe the recovery of oil production together with current high oil prices should contribute to narrowing the current account deficit to 4.1% of GDP in 2022. However, both monetary and fiscal stimuli need to be reduced to prevent the economy from overheating, otherwise the current account pressures risk being bigger.
Barclays expect Banrep to continue to take the lead in the removal of the stimuli to the economy as a significant reduction of the fiscal stimulus is not likely before the May elections.
Therefore, Barclays think Banrep would need to accelerate its tightening cycle in the January meeting, moving to a 75bp hike from 50bp in the December meeting. In the last board meeting, already three of the seven members voted for a 75bp hike, the latest data should move the balance in favour of this group. Barclays expect another 75bp in March and foresee a possible switch back to 50bp afterwards to bring the policy rate to 5.0% in April.
Given the uncertainty that the electoral process implies and the potential pressures it could create on the FX, they think the bank would prefer to reach a neutral rate before the electoral process.

To read the full story

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.

CANADA NOV BUDGET DEFICIT CAD8.2 BLN VS YEAR AGO CAD4.0 BLN

MNI BRIEF: Fed's Goolsbee Supports Slowing Rate Cuts

CANADA DELAYS IMPLEMENTING CAPITAL GAINS TAX HIKE TO JAN 2026

MNI BRIEF: US Dec Core PCE Inflation In Line With Expectations

MNI BRIEF: Fed's Bowman Wants Inflation Progress Before Cuts

MNI: BRAZIL'S COPOM RAISES SELIC RATE BY 100 BPS TO 13.25%

MNI: BAKER HUGHES US RIG COUNT 582; OIL RIGS 479; GAS RIGS 98

BAKER HUGHES CANADA RIG COUNT 258; OIL RIGS 186; GAS RIGS 72

EZ/UK Bond Supply Calendar: Austria, UK Auction on Tuesday

GERMANY: Economy Ministry Lowers 2025 Growth Forecast As Expected

MNI EXCLUSIVE: EU-Mercosur Deal Close, But Likely Short-Lived - Officials

GERMANY: Kukies Considers Potential Non-Implementation Of 2024 Suppl' Budget

Real-time Actionable Insight

MNI BRIEF: Canada Retaliates Against US Tariff, But No Oil Tax

MNI US Macro Weekly: Uncertainty Vindicates Fed’s Patience

MNI UST Deep Dive: Refunding Preview - Feb 2025

MNI ASIA MARKETS ANALYSIS: Tsy Yields Bounce o Tariff Timeline

MNI BRIEF: White House Says Tariffs To Be Implemented Saturday

Barclays on Colombia: Faster Withdrawal Of The Stimuli

Why MNI

MNI

PRODUCTS

EVENTS

TOPICS

Sign up now for free trial access to this content.

Why MNI

Real-time Actionable Insight

Barclays on Colombia: Faster Withdrawal Of The Stimuli

Sign up now for free trial access to this content.

Why MNI

MNI

PRODUCTS

EVENTS

TOPICS