February Annual Inflation Tops 8%, Analysts On BanRep

Released over the weekend:

• Colombia Feb. consumer prices rise 1.63% m/m; est. +1.28%
• Colombia Feb. consumer prices rise 8.01% y/y; est. +7.61%
• Colombia Feb. core CPI rises 1.28% m/m
• Colombia Feb. core CPI rises 5.10% y/y

JPMorgan: BanRep to move 150bp in March

• JPM continue to think the prevailing backdrop for inflation is consistent with BanRep needing to deliver an unprecedented 150bp hike at the March 31 meeting, to take the policy rate to 5.5%.
• Notwithstanding the global crosscurrents (higher risk, but higher oil price), their modal forecast absent a confidence shock related to elections would be for BanRep to stop the cycle at 6.5%.
• But JPM remain of the view that risks for the repo rate are to the upside. Next Sunday’s congressional and primary elections will prove a key milestone ahead of the May 29 presidential first round and likely June 19 run-off.

Goldman Sachs

• GS expect the MPC to continue normalizing monetary policy in the upcoming meetings, with the policy rate crossing its neutral level to reach a restrictive monetary stance (policy rate at least at 7.00% by the end of 2022).
• In their assessment, an above-neutral monetary stance is warranted given the strong growth, visibly above-target inflation, drifting inflation expectations, a challenging fiscal outlook, an uncertain political environment, and a large current account deficit that could become more difficult to finance as global financial conditions tighten.