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COLOMBIA: Scotiabank Believes BanRep In No Hurry To Accelerate Rate Cuts

COLOMBIA
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  • Scotiabank believes that last week’s better-than-expected August economic activity data mean that BanRep will not be in a hurry to accelerate the easing cycle. They continue to think that there are more points in favour of a 50bp cut at the next meeting on Oct 31.
  • The problems of economic growth are structural: the lack of investment continues to weigh on industry and construction, and the high cost of borrowing continues to pressure some part of the household’s consumption.
  • In addition, the central bank is more concerned about political issues related to fiscal policy and minimum wage negotiation. With this context, Scotiabank expect the policy rate to fall from 10.25% to 9.75% next week, with fiscal issues, inflation, and international financial conditions being the main factors that could support this decision.
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  • Scotiabank believes that last week’s better-than-expected August economic activity data mean that BanRep will not be in a hurry to accelerate the easing cycle. They continue to think that there are more points in favour of a 50bp cut at the next meeting on Oct 31.
  • The problems of economic growth are structural: the lack of investment continues to weigh on industry and construction, and the high cost of borrowing continues to pressure some part of the household’s consumption.
  • In addition, the central bank is more concerned about political issues related to fiscal policy and minimum wage negotiation. With this context, Scotiabank expect the policy rate to fall from 10.25% to 9.75% next week, with fiscal issues, inflation, and international financial conditions being the main factors that could support this decision.