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COLOMBIA: BanRep Minutes Show That Majority Remain Cautious On Fiscal, CPI Risks

COLOMBIA
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  • The minutes to this week’s BanRep meeting, when the central bank cut by 50bp to 10.25%, confirmed that a cautious majority of the Board felt that a larger move than this could bring risks, given the uncertain fiscal outlook and fact that inflation is still high. They also noted that services inflation remains persistent and that next year’s minimum wage hike creates uncertainty.
  • In contrast, the three members of the committee who voted for a larger 75bp cut felt that the cautious monetary policy stance had contributed to a sustained decline in inflation and that the moderation of inflation expectations created space to provide more support to the economic recovery. They also noted that the policy stance has become more contractionary and that the labour market is showing signs of weakening.
    • The full MNI review with analyst views is here.
  • In other news, Ecopetrol said that an offshore natural gas discovery could potentially produce up to 800mn cubic feet of gas a day, according to CEO Ricardo Roa, enough to meet 80% of Colombia’s demand. The discovery may take 5-7 years to become productive, he said.
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  • The minutes to this week’s BanRep meeting, when the central bank cut by 50bp to 10.25%, confirmed that a cautious majority of the Board felt that a larger move than this could bring risks, given the uncertain fiscal outlook and fact that inflation is still high. They also noted that services inflation remains persistent and that next year’s minimum wage hike creates uncertainty.
  • In contrast, the three members of the committee who voted for a larger 75bp cut felt that the cautious monetary policy stance had contributed to a sustained decline in inflation and that the moderation of inflation expectations created space to provide more support to the economic recovery. They also noted that the policy stance has become more contractionary and that the labour market is showing signs of weakening.
    • The full MNI review with analyst views is here.
  • In other news, Ecopetrol said that an offshore natural gas discovery could potentially produce up to 800mn cubic feet of gas a day, according to CEO Ricardo Roa, enough to meet 80% of Colombia’s demand. The discovery may take 5-7 years to become productive, he said.