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COLOMBIA: JP Morgan Expecting Year-End Policy Rate of 8.5%, Upside Risks

COLOMBIA
  • JPMorgan expect BanRep to maintain the 50bp easing pace steady this Friday. 
  • The annual inflation deceleration stalled in May, but sequential performance suggests the downward trend stays in place. In their base case, JPM expect further easing ahead, with the policy rate converging to 8.5% by the year end. 
  • That said, stronger activity performance suggests the output gap may navigate slightly to the positive side, and fiscal risks have not completely dissipated despite the deployed spending adjustments. These factors tilt the risk bias towards higher rather than lower policy rates.

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