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COLOMBIA: Five Member Majority Voted to Slow Down the Pace of Easing

COLOMBIA
BulletEM BulletEmerging Market News
  • Statement is here: https://www.banrep.gov.co/es/noticias/junta-directiva-diciembre-2024
    • "Five directors voted in favour of this decision, one for a 50 bps reduction and one for a 75 bps reduction."
    • "Recent exchange rate pressures have been associated, among other reasons, with the tightening of external financial conditions, with increases in long-term interest rates in the United States, reductions in the expected pace of interest rate cuts by the FED and increases in the risk margins of emerging economies. Additionally, uncertainty about the situation of public finances in Colombia has generated volatility in the exchange rate and public debt markets."
      Hawkish surprise here from BanRep, with a five member majority favouring to slow the pace of easing, against the majority of analyst forecasts.
  • It appears the known fiscal anxieties and associated fx pressures have prompted the moderately hawkish shift. A hawkish Fed no doubt playing its part as well.
  • The board notes that "the interest rate reduction approved today continues to support the recovery of economic growth and maintains the required prudence given the risks that remain regarding the behavior of inflation. The Board of Directors reiterates that future decisions will depend on the new information available."
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  • Statement is here: https://www.banrep.gov.co/es/noticias/junta-directiva-diciembre-2024
    • "Five directors voted in favour of this decision, one for a 50 bps reduction and one for a 75 bps reduction."
    • "Recent exchange rate pressures have been associated, among other reasons, with the tightening of external financial conditions, with increases in long-term interest rates in the United States, reductions in the expected pace of interest rate cuts by the FED and increases in the risk margins of emerging economies. Additionally, uncertainty about the situation of public finances in Colombia has generated volatility in the exchange rate and public debt markets."
      Hawkish surprise here from BanRep, with a five member majority favouring to slow the pace of easing, against the majority of analyst forecasts.
  • It appears the known fiscal anxieties and associated fx pressures have prompted the moderately hawkish shift. A hawkish Fed no doubt playing its part as well.
  • The board notes that "the interest rate reduction approved today continues to support the recovery of economic growth and maintains the required prudence given the risks that remain regarding the behavior of inflation. The Board of Directors reiterates that future decisions will depend on the new information available."