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 2023
Executive Summary:
- BanRep are unanimously expected to hold the policy rate steady once again at 13.25%.
- Headline and core inflation remain at stubbornly high levels and the process of disinflation remains slower than previously envisaged. The committee will likely reinforce its data dependent stance, placing the emphasis on more inflation progress before committing to any kind of easing signal.
- This decision should be bolstered by deteriorating inflation expectations alongside the tightening of already-volatile global financial conditions in recent weeks.
- However, given the persistent rhetoric from Finance Minister Bonilla and the administration, and the two dissenting votes for policy easing in September, markets will focus once again on the vote split, plus any potential guidance regarding the short-term outlook for monetary policy.
Click to view the full preview:
MNI Colombia Central Bank Preview - October 2023.pdf
Finance Minister Bonilla Sees Room For Rates To Reach 8.00%
Finance Minister Bonilla has strengthened his rhetoric since the last decision, stating that inflation has eased for six straight months, and if the trend continues, it could slow from 10.99% now to 9.2% in December and 5% in 2024. With these developments he detailed that the central bank could cut rates to 12.5% by the end of this year and then further to 8% through 2024.
In stark contrast, and perhaps more representative of the broader committee, co-director Olga Lucia Acosta (the newest member of the board) stated that the central bank could put its credibility at risk if it rushed to cut interest rates prematurely. She explained that “there’s a big risk in easing early then having to reverse course,” speaking in her first interview since she was appointed by President Petro last year.
2023 & 2024 Year-End Inflation Expectations Deteriorate
The most recent economist survey from the central bank showed an increase in 2023 year-end inflation expectations to 9.59% compared to the previous 9.48%. Furthermore, 2024 year-end CPI expectations now stand at 5.32% from a prior level of 5.00%, clearly indicating the de-anchored medium-term projections. Alongside these developments, the median forecast within the survey now expects the first rate cut (50bps) in December, rather than at this meeting.
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.