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COLOMBIA: BofA Say Recent Developments Prompted Change of Call

COLOMBIA
  • Bank of America expect BanRep to cut the policy rate by 50bp this week, to 11.25%, in line with consensus. BofA thought BanRep would accelerate the pace (to 75bp) by this meeting. However, they are changing their mind because of recent developments. 
  • The government's acknowledgement of wider fiscal deficits induced a sell-off in the markets and the exchange rate depreciation poses risks on inflation. 
  • Also, during the intermeeting period (between late April and now) there hasn't been any guidance from board members insinuating that BanRep will deliver a larger cut in the upcoming meeting.

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