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Dovish Decision Turns Focus to Local Market Open

COLOMBIA
  • The Banrep hiked rates by 100bps, a smaller rate hike than forecast, after yesterday’s close. Additionally, the vote split added to the bank’s dovish balance, with one member opting for a 50bps hike and no policymakers looking for larger than 100bps.
  • Villar defended the decision, highlighting rates at 10.00% as already being restrictive and helping to moderate future inflation. Meanwhile, the board disclosed that no discussions have taken place on FX intervention, suggesting the bar remains high for COP weakness.
Sell-side views:
  • Scotiabank see a further 50bps in October, for a terminal rate of 10.50%.
  • Goldman Sachs wait for the minutes release (Oct 3rd) to calibrate their call, but see the bank signalling that their job is not yet done.
  • JPM write that the decision tilted dovish, but BanRep is not yet signalling that they are done with the cycle – and think deteriorating inflation expectations and a more aggressive Fed will force BanRep to reach a higher terminal rate at 11% by December (+75bps in October, +25bps in December)
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  • The Banrep hiked rates by 100bps, a smaller rate hike than forecast, after yesterday’s close. Additionally, the vote split added to the bank’s dovish balance, with one member opting for a 50bps hike and no policymakers looking for larger than 100bps.
  • Villar defended the decision, highlighting rates at 10.00% as already being restrictive and helping to moderate future inflation. Meanwhile, the board disclosed that no discussions have taken place on FX intervention, suggesting the bar remains high for COP weakness.
Sell-side views:
  • Scotiabank see a further 50bps in October, for a terminal rate of 10.50%.
  • Goldman Sachs wait for the minutes release (Oct 3rd) to calibrate their call, but see the bank signalling that their job is not yet done.
  • JPM write that the decision tilted dovish, but BanRep is not yet signalling that they are done with the cycle – and think deteriorating inflation expectations and a more aggressive Fed will force BanRep to reach a higher terminal rate at 11% by December (+75bps in October, +25bps in December)