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Goldman Sachs Anticipate 2.75%-3.00% Year End Policy Rate

COLOMBIA

Goldman Sachs Following the BanRep Minutes:

  • GS believe the MPC will continue to normalize policy in the coming meetings and the bar to accelerate the pace to 50bp is likely relatively low.
  • Reducing the degree of monetary accommodation is warranted given recent higher than expected inflation prints, deteriorating headline and core inflation and currency expectations, and a large and widening current account deficit.
  • In addition, recent hawkish regional and global monetary developments, high risk-premia given the challenging fiscal picture, sovereign rating downgrades, and an uncertain political and policy backdrop also justify the central bank's move towards monetary policy normalization.
  • At this stage GS are anticipating the policy rate reaching 2.75%-3.00% by the end of 2021, and 3.50%-4.00% by end-2022.

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