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 - Jan 2023: Terminal Rate Nearing
Executive Summary
- The majority of surveyed analysts expect BanRep to hike the overnight lending rate by 100bps to 13.00%.
- A deterioration in both headline and core CPI data as well as short & medium-term inflation expectations warrant maintaining a hawkish posture at the January meeting.
- However, there remain a notable minority looking for a more moderate hike and given the most recent comments from finance minister Ocampo on not seeing the need for further tightening, particular significance is placed on Friday’s decision.
Click to view the full preview:
MNI BanRep Preview - January 2023.pdf
Ocampo Believes Inflation Has Peaked, Questions Further Tightening
Speaking to Reuters in Davos on January 17, finance minister Jose Antonio Ocampo indicated that he does not see the need for further monetary tightening, indicating that to be his opinion and the government’s opinion. While analysts were quick to point out that Ocampo had previously described rates as “sufficiently high” when the policy rate was at 10.00%, the closer proximity to the terminal rate combined with the split vote in December increase the probability for a surprise at the January meeting.
Additionally, questions over further tightening were already presented in the December meeting minutes. The board member who voted for just a 25bp increase argued that the purpose of monetary policy to control excess demand has already been achieved, so further interest rate hikes are counterproductive. Indeed, BanRep governor Leonardo Villar on December 25, while noting that tightening is not necessarily over, explained that “we are getting closer to what could be considered the ceiling of that process.”
However, the board have reiterated that future decisions will be based on the new information available and considering this, the latest inflation data will be analysed with caution. The latest results of the central bank’s survey of economists indicated the median estimate for the overnight rate at the January decision has risen from 12.50% to 13.00% as the central bank continues to battle the stubborn inflation backdrop.
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.