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COLOMBIA: Scotiabank Expects Political Issues To Prompt Another 50bp Rate Cut

COLOMBIA
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  • Scotiabank notes that yesterday’s BanRep minutes showed that the discussion amongst the Board wasn’t easy and that political concerns are the main source of division. They don’t expect those political issues, specifically the fiscal uncertainty and the minimum wage negotiation to be solved before the next monetary policy meeting on October 31. In that sense, they expect the board to continue favouring another cautious cut of 50bp this month.
  • In December, Scotiabank sees space to accelerate the easing cycle to a 75bp cut. First, to prevent taking monetary policy into a more contractionary stance, and secondly, because they expect the economy to deliver further signals of weakness and better clarity around current political concerns. They expect the monetary policy rate to close the year at 9%, while next year they maintain their estimate of a 5.5% terminal rate.
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  • Scotiabank notes that yesterday’s BanRep minutes showed that the discussion amongst the Board wasn’t easy and that political concerns are the main source of division. They don’t expect those political issues, specifically the fiscal uncertainty and the minimum wage negotiation to be solved before the next monetary policy meeting on October 31. In that sense, they expect the board to continue favouring another cautious cut of 50bp this month.
  • In December, Scotiabank sees space to accelerate the easing cycle to a 75bp cut. First, to prevent taking monetary policy into a more contractionary stance, and secondly, because they expect the economy to deliver further signals of weakness and better clarity around current political concerns. They expect the monetary policy rate to close the year at 9%, while next year they maintain their estimate of a 5.5% terminal rate.