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COLOMBIA: Deutsche Bank Now Expects 50bp BanRep Rate Cut This Week

COLOMBIA
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  • Deutsche Bank now thinks that the external and domestic headwinds have evolved in a way that are likelier to sway a majority of BanRep board members to maintain the easing rhythm and favour another 50bp cut, to 9.75%, on Thursday. For now, DB still believes that a larger cut could be delivered in the mid-December meeting, but they may re-visit this call after this week’s decision.
  • On the external front, potential shifts in the direction for trade, fiscal, migration and monetary policies in the US as a result or the upcoming election have become a source of increased financial volatility.
  • On the domestic front, policy risks have remained prominent on the back of the continued lack of an agreement with regards to the financing bill, the on-going legislative debate over the de-centralisation bill, and the recent approval by the lower house of the labour reform proposed by the government. Accordingly, the reaction of local assets to these developments has featured COP depreciation and increased risk premia.
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  • Deutsche Bank now thinks that the external and domestic headwinds have evolved in a way that are likelier to sway a majority of BanRep board members to maintain the easing rhythm and favour another 50bp cut, to 9.75%, on Thursday. For now, DB still believes that a larger cut could be delivered in the mid-December meeting, but they may re-visit this call after this week’s decision.
  • On the external front, potential shifts in the direction for trade, fiscal, migration and monetary policies in the US as a result or the upcoming election have become a source of increased financial volatility.
  • On the domestic front, policy risks have remained prominent on the back of the continued lack of an agreement with regards to the financing bill, the on-going legislative debate over the de-centralisation bill, and the recent approval by the lower house of the labour reform proposed by the government. Accordingly, the reaction of local assets to these developments has featured COP depreciation and increased risk premia.