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Goldman Sachs: MPC To Drive Policy Rate Further Up In 2022, To 7.50%

COLOMBIA
  • Goldman Sachs expect the MPC to accelerate the pace of normalization and hike the policy rate by at least 150bp, to 5.50%. Given the most recent inflation prints and the fact that adjusting by one-year-ahead inflation expectations the ex-ante real policy rate remains at historically low levels, GS assess a 33% probability of a bolder 175-200bp increase.
  • Overall, continuing to reduce the degree of monetary accommodation towards an above-neutral policy stance is warranted given above-target inflation, drifting inflation expectations, and a large current account deficit whose funding could become more challenging as global financial conditions tighten.
  • In addition, in their assessment high risk-premia, given a challenging fiscal picture and an uncertain election, also justify a careful calibration of the central bank’s monetary stance. GS expect the MPC to drive the policy rate further up in 2022, to 7.50%.
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