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Goldman Sachs: 30% Probability Of Surprise 25bp Rate Hike

COLOMBIA
  • Reducing the degree of monetary accommodation is in the money, given the recent inflation and solid growth dynamics, widening current account deficit (now approaching 4% of GDP), hawkish global monetary developments, and rising risk-premia given the negative fiscal developments, sovereign rating downgrades, and unsettled political and social backdrop.
  • Focus of the MPC policy discussion will likely be to harden the language and signal a rising likelihood of near-term lift-off or move ahead immediately with a somewhat pre-emptive rate hike.
  • In all cases, GS expect the policy statement to turn more hawkish with the central bank likely to escalate the level of concern with inflation and institutional and fiscal/political risk.

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