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 - October 2022
Executive Summary
- The majority of surveyed analysts expect BanRep to hike the overnight lending rate by 100bps to 11.00%.
- Further aggressive monetary tightening is deemed necessary amid rising inflation data, deteriorating inflation expectations and concerning pressures on domestic financial markets.
- President Petro’s most recent comments relating to the inefficiency of rate hikes to tame inflation and his rhetoric surrounding capital controls provide a complicated backdrop for the MPC at the October meeting.
- Surveyed outcomes range from +50bp to +150bp hikes, with some analysts highlighting the possibility of an FX intervention announcement despite the board’s comments suggesting it will not be implemented.
Click to view the full preview: MNI BanRep Preview - October 2022.pdf
Firmer August Economic Activity (+8.6% Y/y vs 6.4% in July) suggests that excess domestic demand is continuing to assert upward pressure on prices and contributing to large external imbalances. The relentless profile of inflation and sour current account balance data should tilt the majority of the board to opt for at least a 100bps hike and retain 2022’s hawkish bias in the post-rate decision press conference. This view is bolstered by the consensus view of a further acceleration for CPI in October, with the annual headline rate estimated to climb to 12.14%, while an improving unemployment rate only adds to the expected tightness of labour markets into year-end.
Alarming Petro Comments Spark Domestic Asset Selloff
Colombian asset markets have been roiled over recent weeks by heightened uncertainty over the policies of the Petro administration. Proposals such as capital controls were floated and despite then being rescinded, the impact on domestic financial markets was relentless.
Despite moderating its decline in recent sessions the peso weakened to a record low of 4,998.75 per dollar, while the yield on the nation’s 10-year local government bonds briefly surged above 15%.
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.