Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
MNI Colombia Central Bank Preview - Dec 2023
Executive Summary
- Analysts are divided over whether the Colombian central bank will once again keep rates steady at 13.25% or if BanRep will choose to initiate the easing cycle this week, cutting the overnight lending rate by 25bps to 13.00%.
- Stubbornly high levels of both headline and core inflation, combined with weaker-than-expected economic activity will likely prompt substantial debate among the committee and another split vote on the rate decision is likely.
- However, the most recent commentary from the central bank Governor may point to the hawkish majority prevailing for one further meeting, before an easing cycle can commence in 2024.
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MNI Colombia Central Bank Preview - December 2023.pdf
Finance Minister Bonilla Will Continue To Lead Charge For Monetary Easing
Having previously been very vocal in his intentions to ease policy in the lead up to the October meeting, it is widely believed that finance minister Ricardo Bonilla was one of the dissenting voters who would have preferred a 25bp decrease to the overnight lending rate at both prior MPC meetings. Most recently, Bonilla reiterated that Colombia’s key interest rate “has reached its peak” and it’s time for the central bank to start cuts, citing the high interest rates as being one of the main obstacles for economic recovery.
Perhaps more interesting have been the comments from BanRep Governor Leonardo Villar, which may still lean towards the hawkish majority prevailing for one last meeting this week. Prior to the December inflation data, Villar stated that an ‘important’ drop in the inflation level would lead to rate cuts. While the comments appeared to be setting up a dovish pivot from the committee, the data has perhaps not met that description, especially when looking at core metrics. Importantly, Villar later added that inflation still remains “very far” from the nation’s goal of 3% and Colombia is lagging behind regional peers. Villar went on to say that Colombia real interest rates are relatively low, while the inflation level is still too high and that Colombia risks inflation slowing its path to reverse if the central bank cuts nominal interest rates too soon.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.