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COLOMBIA: Itaú Still Expecting 50BP BanRep Cut in September

COLOMBIA
BulletEM BulletEmerging Market News
  • While Itau believe BanRep will maintain the 50bp cutting pace at the end of the month, a swifter easing cycle by the Fed, together with declines in CPI expectations may lead to greater appetite within the Board to accelerate the pace of cuts.
  • Although the large downside surprise was mainly driven by food prices, the core disinflation processes continues to progress despite stickiness in certain services (rentals). The recent trucker strikes may see a significant transitory food price rebound in September.
  • Itau’s preliminary estimate for this month's CPI, to be released on October 7, is between 0.3% and 0.4%, resulting in annual inflation falling to 5.95%. They expect a 2024 year-end CPI at 5.6%, with risks tilted to the upside given the diesel price increase announced by the government and rental price dynamics.
  • This viewpoint is broadly supported by other analysts as outlined earlier: https://marketnews.com/colombia-analysts-tilting-towards-another-50bp-cut-in-september
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  • While Itau believe BanRep will maintain the 50bp cutting pace at the end of the month, a swifter easing cycle by the Fed, together with declines in CPI expectations may lead to greater appetite within the Board to accelerate the pace of cuts.
  • Although the large downside surprise was mainly driven by food prices, the core disinflation processes continues to progress despite stickiness in certain services (rentals). The recent trucker strikes may see a significant transitory food price rebound in September.
  • Itau’s preliminary estimate for this month's CPI, to be released on October 7, is between 0.3% and 0.4%, resulting in annual inflation falling to 5.95%. They expect a 2024 year-end CPI at 5.6%, with risks tilted to the upside given the diesel price increase announced by the government and rental price dynamics.
  • This viewpoint is broadly supported by other analysts as outlined earlier: https://marketnews.com/colombia-analysts-tilting-towards-another-50bp-cut-in-september