MNI Colombia Central Bank Preview - March 2021: Unanimous Hold

The full preview and analyst views can be found here:

MNI BanRep Preview March 2021.pdf

Unanimous Hold: The MPC will most likely keep the overnight lending rate unchanged at 1.75%. Additionally, there is potential for unanimity among the committee, compared to the two prior split decisions.

State of Play – Since the January meeting, both M/M and Y/Y inflation rose ahead of expectations to 0.64% and 1.56% in February. Core inflation measures also ticked higher with ex-food rising to 0.93%, however still remain well below target. Base effects may further dampen the headline print, however analysts expect a gradual recovery starting in April.

GDP was broadly in line with consensus forecasts at 6%, however the non-seasonally adjusted annual figure reported a smaller contraction than expected at -3.6% y/y versus -4.5% survey.

Despite the February CPI increase, in the most recent monetary policy report, the central bank did revise the 2021 inflation forecast down from 2.6% to 2.3%. 2022 year-end expectations remain anchored below the 3% target. Combined with the advancing economic recovery, the bank will feel little pressure to act on policy.